Penalty should not be imposed for mentioning wrong vehicle number with a difference of three digits in E-Way Bill

The Hon'ble Allahabad High Court in the case of Hindustan Herbal Cosmetics v. State of UP [Writ Tax No. 1400 of 2019 dated January 2, 2024] allowed the writ petition and set aside the orders imposing penalty on the ground that the typographical error of entering the wrong vehicle number in e-way bill upto three digits instead of permitted two digits as per the Circular No. 41/15/2018-GST dated April 13, 2018 and Circular No. 49/23/2018 dated June 21, 2018("the Circulars")  is minor in nature and therefore, imposition of penalty is without jurisdiction and illegal in law. 

Facts

Hindustan Herbal Cosmetics ("the Petitioner") is a seller of cosmetics and is supplying the goods to the Recipient along with proper tax invoice, bilty and e-way bill dated May 23, 2018.  The Petitioner's goods during transit to the Recipient were seized by the Revenue Department ("the Respondent") on the ground that vehicle no. in the e-way bill was incorrect and thereby penalty was imposed vide order dated May 24, 2018 ("the Impugned Order"). Thereafter, the Petitioner filed an appeal before the Respondent Appellate Authority. The Respondent Appellate Authority dismissed the demand raised by the Respondent and confirmed the penalty imposed on the Petitioner vide order dated August 29, 2019 ("the Impugned Appellate Order").

Aggrieved by the Impugned Order and Appellate Order, the Petitioner filed a writ petition before the Hon'ble Allahabad High Court. 

Issue

Whether penalty should be imposed for mentioning wrong vehicle number with a difference of three digits in the E-Way Bill? 

Held

The Hon'ble Allahabad High Court in the case of Writ Tax No. 1400 of 2019 held as under:

• Noted that, in the present case there is a typographical error of vehicle number with difference of three digits instead of permitted two digits as per the Circulars.
• Relying upon the judgement of the Hon'ble Supreme Court in the case of Assistant Commissioner ST & Ors. v. Satyam Shivam Papers Pvt. Ltd. [SLP (C) No. 21132/2021 dated January 12, 2022]and judgement of Hon'ble Allahabad High Court in the case of M/s. Varun Beverages Limited. v. State of U.P. and Ors. [Writ Tax No. 958 of 2019 dated February 2, 2023], the Hon'ble High Court noted that, the presence of mens rea is a primary requirement for determining evasion of tax for imposition of penalty. Also, typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. 
• Opined that, in the particular case wherein the error is minor in nature, the penalty under Section 129 of the CGST Act, is without jurisdiction and illegal in law. 
• Held that, the Impugned Order and Appellate Order is set aside, Hence, the writ petition is allowed.