No, the Honorable Allahabad High Court in the case of Hawkins Cookers Ltd. v. State of UP [Writ Tax No. 739 of 2020 dated 12.02.2024] set aside the penalty orders and held that the typographical or clerical error in the e-way bill is not a ground for imposition of penalty when most of the required documents are accompanied with the goods supplied.
The Honorable Allahabad High Court observed that for imposition of penalty under Section 129 of the Central Goods and Services Tax Act, 2017, 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. The Honorable Court noted that when there is a typographical or clerical error in the e-way bill, and most of the documents required are accompanied by the goods, a presumption to evade tax does not arise and 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.
Author’s Comments:
As per Circular No. 64/38/2018 dated 14.09.2018, a general penalty under section 125 of the GST Act must be imposed in case of minor breaches or discrepancies.
In the Author’s opinion, all the discrepancies in relation to the movement of goods except the fatal errors like non issuance of tax invoices are to be treated as minor discrepancies and no penalty u/s 129 of the GST Act can be imposed.
As per Section 129 and Rule 138A of the GST Act, until and unless mensrea exists and is proved, all the errors and omissions have to be termed as non-fatal errors and no penalty under section 129 can be imposed.
The Honorable Supreme Court of India has decided on the same issue in the case of Assistant Commissioner ST & Ors. Versus Satyam Shivam Papers Pvt. Ltd. [Special Leave to Appeal (C) No.(s) 21132/2021 dated January 12, 2022].
Similar orders were passed by the Honorable Tripura High Court in the case of NE Equipment Solutions Pvt. Ltd. Versus The State of Tripura and others [WP(C) No. 577/2021] dated August 24, 2021 and also a similar judgment was passed by the Honorable Gujarat High Court in the case of M/s. Shree Govind Alloys Pvt. Ltd. Versus State of Gujarat (R/Special Civil Application No. 23835 of 2022) dated 01.12.2022.
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