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Penalty Can’t Be Levied for Typographic Error in GST E-Way Bill

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Penalty Can’t Be Levied for Typographic Error in GST E-Way Bill
Allahabad HC's Order for M/S. Hindustan Herbal Cosmetics

The Allahabad Excessive Courtroom dominated {that a} minor typographical error within the e-way invoice with out another materials establishing an intention to evade tax shall not draw a penalty below Part 129 of the Items and Service Tax Act, 2017.

Putting reliance on the choice of Allahabad Excessive Courtroom in M/s. Varun Drinks Restricted v. State of U.P. and a couple of others, the judgment of Supreme Courtroom in Assistant Commissioner (ST) and others v. M/s. Satyam Shivam Papers Pvt. Ltd. And one other, Justice Shekhar B. Saraf acknowledged that

Upon perusal of the judgments, the precept that emerges is that the presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error within the e-way invoice with none additional materials to substantiate the intention to evade tax mustn’t and can’t result in the imposition of penalty.

A Temporary Historical past of Factual Background

The petitioner, a licensed cosmetics supplier, was delivering merchandise to a different registered supplier in Jharkhand when their items have been halted. They argued that the transaction was correctly documented with a tax bill, bilty, and e-way invoice.

Nonetheless, a seizure order was issued because of a discrepancy within the car quantity on the e-way invoice; it displayed DL1 AA 3552 as an alternative of the correct DL1 AA 5332. Moreover, a penalty was imposed solely due to this incorrect car quantity.

The petitioner’s counsel argued that there was no accusation of intent to evade taxes on the a part of the petitioner, because the GST e-Approach invoice, bilty, and tax bill all aligned, and the consignee was additionally a registered supplier. They emphasised a typographical error within the e-way invoice concerning the car quantity, which was acknowledged within the contested order.

To bolster their stance, the petitioner’s counsel referenced the Allahabad Excessive Courtroom’s choice in M/s. Varun Drinks Restricted v. State of U.P. and a couple of others, in addition to the Supreme Courtroom’s judgment in Assistant Commissioner (ST) and others v. M/s. Satyam Shivam Papers Pvt. Ltd. And one other.

Nonetheless, the respondent’s counsel cited a round to argue that the Division refrains from imposing penalties solely in cases the place there’s a mistake of two digits within the car quantity, and never past that restrict.

Learn Additionally:- Allahabad HC: Tax Penalty Deemed Invalid If GST SCN Phrases Are Conceded

They distinguished the Allahabad Excessive Courtroom’s ruling in M/s. Varun Drinks Restricted, asserting that it concerned a inventory switch with none tax legal responsibility at subject.

A Verdict By the Excessive Courtroom

The Courtroom famous that regardless of the error involving three digits moderately than the desired two within the round, it pressured the significance of making use of the legislation pretty and fairly in related circumstances, moderately than permitting it to exist in isolation.

It emphasised that the intent to evade taxes is an important situation for imposing a penalty. Subsequently, the Courtroom concluded that penalizing solely because of a typographical error within the e-way invoice, with none extra proof indicating an intention to evade taxes, was unjustifiable.

Contemplating the discrepancy between ‘3552’ and ‘5332’ as a transparent, minor typographical mistake, the Courtroom dominated that it didn’t warrant a penalty below Part 129 of the Act.

In sure circumstances the place lapses by the sellers are main, it might be deemed that there’s an intention to evade tax however not so in each case. Sometimes when the error is a minor error of the character discovered on this specific case, I’m of the view that imposition of penalty below Part 129 of the Act is with out jurisdiction and unlawful in legislation.

It was Subsequently Permitted to File a Writ Petition.

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