The Hon’ble Karnataka High Court in the case of M/s Mataji Industries v. Joint Commissioner of Commercial Taxes (Appeals) [Writ Petition No. 104602 of 2023 (T-RES), dated June 12, 2025] held that the confiscation of goods and conveyance, and the consequential demand of tax, penalty, and fine, based on a clerical mismatch in the tax invoice, was unsustainable, and directed refund of the amount paid by the Petitioner.
Facts:
Mataji Industries (“the Petitioner”) is engaged in the supply of dry grapes. A conveyance bearing No. KA-28-C-9782 transporting dry grapes from Vijayapur to Coimbatore was intercepted on July 04, 2021 at Vanagiri Toll Plaza, Kustagi, Karnataka by the enforcement authorities.
The Assistant Commissioner of Commercial Taxes (Enforcement), Hospete (“the Respondent”) upon inspection in the belief that copra was transported obtained a statement from the driver in Form GST MOV-01, and conducted physical verification on July 5, 2021. Upon verification, it was found that the goods being transported comprised 3010 kg of dry grapes, and no copra was found.
The Petitioner contended that there was a typographical error in the tax invoice at serial number four, which mentioned “copra” instead of “dry grapes”, and submitted that the correct description was reflected in the e-way bill. It was further submitted that all applicable taxes had been duly paid, and there was no intent to evade tax. The Petitioner submitted that the proceedings were initiated despite production of all supporting documents including tax invoice, packing list and bill of entry.
The Respondent contended that the goods under transport did not match the description in the invoice and alleged an attempt to evade tax. It was argued that there was deliberate misdeclaration and that the confiscation was valid under Section 130 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Aggrieved by the order of confiscation dated July 10, 2021, the Petitioner filed a statutory appeal before the Joint Commissioner of Commercial Taxes (Appeals), Belgaum Division, which was dismissed vide order dated August 23, 2022. The Petitioner thereafter filed the present writ petition challenging the said orders.
Issue:
Whether the authorities were justified in invoking Section 130 of the CGST Act in a case involving a clerical error in the tax invoice, despite full payment of tax and absence of intent to evade?
Held:
The Hon’ble Karnataka High Court in Writ Petition No. 104602 of 2023 (T-RES) held as under:
- Observed that, upon physical verification conducted by the Respondent on July 5, 2021, only dry grapes were found in the vehicle and not a single piece of copra was detected.
- Noted that, while the tax invoice mentioned “copra” at one line item, the e-way bill reflected the correct description as “dry grapes”, and that the Petitioner had paid the requisite GST on the entire consignment.
- Held that, the discrepancy was a typographical error and there was no material on record to suggest that the Petitioner had any intent to evade tax.
- Observed that, when the error is clerical in nature, the initial burden lies on the department to establish intent to evade tax, and in this case, the department had failed to discharge such burden and had not discredited the supporting documents produced by the Petitioner.
- Noted that, the order passed by the Appellate Authority also contained discrepancies in the quantity of goods mentioned and merely confirmed the original order without proper analysis.
- Further, quashed the order dated August 23, 2022, passed by the Appellate Authority and the confiscation order dated July 10, 2021, passed by the Original Authority and directed the concerned department to refund the amount collected from the Petitioner.
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