No Penalty for Typographic Error in GST E-Way Bill – Allahabad High Court

Court held that imposing a penalty under Section 129 of the Act is without jurisdiction

Penalty u/s. 129 unjustifiable for Typo Error in GST e-Way Bill: In a recent judgment by the Allahabad High Court in case of M/s. Hindustan Herbal Cosmetics (Case Citation-2024 LiveLaw(AB)9), the court clarified that a minor typographical error in the GST e-way bill, without evidence of an intention to evade tax, will not attract a penalty under Section 129 of the Goods and Service Tax Act, 2017. This ruling builds upon earlier decisions, including M/s. Varun Beverages Limited v. State of U.P. and 2 others and the Supreme Court’s judgment in Assistant Commissioner (ST) and others v. M/s. Satyam Shivam Papers Pvt. Ltd. And another.

Factual Background:

The case involved M/s. Hindustan Herbal Cosmetics, a licensed cosmetics dealer, facing a penalty due to a discrepancy in the vehicle number on the e-way bill. The incorrect vehicle number (DL1 AA 3552 instead of DL1 AA 5332) led to a seizure order. Despite proper documentation with a tax invoice, bilty, and e-way bill, a penalty was imposed solely based on the typographical error.

Legal Arguments:

The petitioner’s counsel argued that there was no intention to evade taxes, emphasizing that the GST e-way bill, bilty, and tax invoice all matched. They cited the Allahabad High Court’s decision in M/s. Varun Beverages Limited and the Supreme Court’s judgment to support their stance. In contrast, the respondent’s counsel referred to a circular, claiming that penalties are avoided only for mistakes involving two digits, not beyond.

High Court’s Verdict:

The Allahabad High Court, while acknowledging the circular’s specifications, emphasized the need to apply the law fairly. It reiterated that the presence of mens rea, or intention to evade taxes, is crucial for imposing a penalty. The court concluded that penalizing solely for a typographical error, without additional evidence of tax evasion intent, was unjustifiable. The three-digit error was deemed a minor typographical mistake, and the court ruled it did not warrant a penalty under Section 129 of the Act.

Conclusion:

In cases where errors are major, indicating an intention to evade taxes, penalties may be justifiable. However, for minor errors like the one in this case, the court held that imposing a penalty under Section 129 of the Act is without jurisdiction and illegal. This ruling emphasizes the importance of considering the circumstances and intent before penalizing for typographical errors in GST e-way bills.

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