Typographical or clerical error in e-way bill is not a ground for imposition of penalty

The Allahabad High Court has ruled that minor typographical or clerical errors on an e-way bill should not result in a penalty, especially when the goods are accompanied by most of the required documentation. The court emphasised that an intention to evade tax is crucial for imposing penalties under the CGST Act. If supporting documents are provided and the errors are clearly accidental, a presumption of tax evasion cannot be made, and penalties should not be levied.

The Hon'ble Allahabad High Court in the case of Hawkins Cookers Ltd. v. State of UP [Writ Tax No. 739 of 2020 dated February 12, 2024] set aside the penalty errors and held that, typographical or clerical error in e-way bill is not a ground for imposition of penalty when most of the required documents are accompanied with the goods supplied. 

Facts

Hawkins Cookers Ltd ("the Petitioner") is engaged in the business of manufacturing and selling pressure cookers under the brand name Hawkins. The Petitioner purchased/transferred stock of various parts/raw materials for manufacturing of pressure cooker from outside the state of UP where the Petitioner factory is located. E-way bills were issued by the Supplier wherein out of 8 e-way bills issued, only four e-way bills correct place of supply the Petitioner was mentioned. Thereafter, penalty was imposed by the Revenue Department ("the Respondent") vide penalty order dated February 14, 2020, and appellate order dated October 13, 2020 ("the Impugned Orders").

Aggrieved by the Impugned Orders, the Petitioner filed writ petition for quashing of the Impugned Orders on the ground that, the said mistakes committed were clerical and typographical errors. 

Issue

Whether typographical or clerical error in e-way bill is a ground for imposition of penalty?

Held

The Hon'ble Allahabad High Court in the case of Writ Tax No. 739 of 2020held as under:

• Observed that, for imposition of penalty under Section 129 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") the intention to evade tax is important. The existence of intention may be presumed by the Department when the rules are not complied with. Further, the presumption of evasion of tax is rebuttable when material pertaining to supply of goods is provided by the owner/transporter. 
• Noted that, when there is a typographical or clerical error in the e-way bill, and most of the documents required are accompanied with the goods, a presumption to evade tax does not arise. 
• Opined that, mere technical error committed by the Petitioner should not lead to imposition of harsh penalty upon the Petitioner. Therefore, the penalty imposed in the present case is without any imposition of law. 
• Held that, Impugned Orders are quashed. Hence, the writ petition is allowed.