In a significant ruling, the Allahabad High Court has set aside a seizure and penalty order for a technical error in the place of dispatch mentioned on a GST e-way bill, finding no evidence of tax evasion. The decision underscores that minor discrepancies in documentation do not justify punitive measures under the Central Goods and Services Tax (CGST) Act unless intent to evade tax is established.
The case arose when GST authorities intercepted a consignment belonging to M/s Saumya near Mathura, end route to Himachal Pradesh. The e-way bill listed Chandrapur, Maharashtra, as the dispatch location, while the goods were loaded from Nagpur. Citing this discrepancy, authorities suspected tax evasion, imposed an integrated GST, and levied a penalty, leading to the seizure of the goods. M/s Saumya, a registered entity with its principal place of business in Chandrapur and an additional location in Nagpur, argued that the error was purely technical, as all tax obligations were fulfilled and the transaction was traceable on the GST portal.
Justice Piyush Agarwal, presiding over the case, emphasized that the purpose of an e-way bill is to track the movement of goods for proper tax assessment. The court noted that the e-way bill was valid, not cancelled, and accompanied by correct tax invoices, with no discrepancies in the quantity or quality of goods. The judgment relied on prior rulings, such as M/s Zhuzoor Infratech Private Limited, which held that technical errors alone do not warrant seizure or penalties without evidence of tax evasion. The court ruled that the authorities’ actions were based solely on the incorrect dispatch location, a minor breach, and ordered the refund of any deposited amounts within one month.
This ruling aligns with a series of precedents from the Allahabad High Court and other judicial bodies, including the Supreme Court’s decision in Assistant Commissioner (ST) & Others vs. M/s Satyam Shivam Papers Private Limited, which stressed that penalties under Section 129 of the CGST Act require proof of intent to evade tax. The court’s decision reinforces the principle that procedural lapses, absent mala fide intent, should not lead to harsh penalties, promoting fairness in tax enforcement.
The verdict has implications for businesses navigating GST compliance, highlighting the need for authorities to differentiate between clerical errors and deliberate tax evasion. Legal experts suggest this ruling could reduce arbitrary seizures and penalties, fostering a more equitable tax system.
Source from: https://www.logisticsinsider.in/allahabad-high-court-quashes-penalty-for-technical-error-in-gst-e-way-bill/
