Tag: E-Way Bill

Penalty [u/s. 129(3)] should be imposed only on intentional tax evasion and not on inadvertent errors

In the case of:

IndeutschIndustries (P.) Ltd. Vs. State of U.P.

Writ Tax No. 1314 of 2019

[2024] 160taxmann.com733 (Allahabad)

It was Observed by Hon’ble High Court of Allahabad that:

  1. It is quite obvious that in the present transaction goods were moving from a SEZ Unit to Domestic Traffic Area and the said goods have been checked by the Custom authorities.
  2. Custom duty and also IGST had been paid on the said goods.
  3. The said goods were intercepted only two-three hours after the goods have left the SEZ Unit, and therefore, it cannot be said that this e-way bill was wrongly being used.
  4. It is a fact that the burden of proof lies on the petitioner in certain cases to show that there was no evasion of tax. However, when the error in the documents is only that of a clerical or typographical error, the initial burden of proof lies on the department to show there was intention to evade tax.
  5. In the present case the department has failed to do so and in fact has not even tried to do so. The documents produced by the petitioner at the time of the interception itself indicates that the goods have been transported from a SEZ Unit to the DTA after payment of custom duty and payment of IGST. This fact has not been discredited by the department in any manner whatsoever.
  6. In fact there is complete silence with regard to the fact whether the petitioner had made the payment as indicated in the invoices and the bill of entry.
  7. The department has accordingly failed to shift the burden of proof on the petitioner as the only error found by the department was that the vehicle number was incorrect. Apart from this one error in the e-way bill, nothing has been shown by the department to justify the imposition of penalty under section 129(3) of the Act.
  8. The impugned order also failed to take into account the document produced by the petitioner of the transporter wherein the explanation was given with regard to the reason for the mistake of the vehicle number in the e-way bill.
  9. It is clear that intention to evade tax is sine qua non before imposition of penalty. In present case the department has failed to establish any such intention whatsoever. Furthermore, the Appellate Authority has failed to look into all the documents that were produced by the petitioner to rebut the allegation of the department with regard to intention to evade tax.

The Impugned Orders were quashed and set aside.

Section 129(3):

(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).]

Provisions of Section 129(1)(a) & (b):

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-

a. on payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

b. on payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;

c. upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

Non-filing of Part B of e-Way Bill – Error of Technical Nature – Penalty Set Aside

Citation:

Rawal Wasia Yarn Dying (P.) Ltd. vs. Commissioner Commercial Tax

Writ Tax No. 352 of 2023 dated January 16 2024

[2024] 158 taxmann.com 609 (Allahabad)

In the above case, it was held that the non-filing of Part B of the e-way bill can be considered merely an error of technical nature and the penalty levied under Section 129(3) was set aside, considering the following facts,

  1. The details of the Truck were contained in the invoice itself,
  2. The goods were not in variance with the invoice and
  3. There is no proof of any intention of the petitioner to avoid payment of Tax.

Relevant provisions of Section 129:

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-


(a)		on payment of penalty equal to 200% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs. 25,000, whichever is less, where the owner of the goods comes forward for payment of such penalty;
(b)on payment of penalty equal to 50% of the value of the goods or 200% of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to 5% of the value of goods or Rs. 25,000, whichever is less, where the owner of the goods does not come forward for payment of such penalty;
(c)upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

129 (3). The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).

Section 129(1) and (3) of CGST Act w.e.f. 1st January 2022

Detention of Goods for absence of E-Way Bill – Double payment of Tax, Penalty and Fine – Transporter to claim refund manually

Citation:

Nitin Vs. Union of India – W.P.(C) No. 2952 of 2023 (High Court of Delhi)

[2023] 157 taxmann.com 543 (Delhi)

Brief Facts of the Case:

  1. Due to absence of E-Way Bill, the petitioner being the Transporter, has paid Tax, Penalty and Fine upon detention of the Truck. Three days later, the supplier has also paid the same amount. Upon verification of documents, the goods were released.
  2. Therefore, Tax, Interest and Fine as quantified in GST MOV-10 has been paid twice.
  3. In the absence of facility for claiming refund of this amount through GST Portal, the petitioner has filed this WP.
  4. Hence, the Hon’ble High Court has disposed of the petition by permitting the petitioner to make an application for Refund manually and directed the Concerned officer to process the said refund application preferably within a period of 4 Weeks.

Where goods were found with Proper Tax Invoice and E-way Bill, Section 129(1)(a) is applicable and not 129(1)(b)

In the case of:

Halder Enterprises Vs. State of U.P. Writ Tax No. 1297 of 2023

[2023] 157 taxmann.com 231 (Allahabad)

Relevant Facts were:

  1. On the date of Interception of goods, i.e., on 3rd October 2023, the petitioner had a valid GST registration, whereas the same was suspended on 6th October 2023, with effect from 18th September 2023. There was no discrepancy on Physical verification of goods – Goods were as per Invoice and E-Way Billl.
  2. The goods were detained on 11th October 2023 (during the period when the registration was suspended), on the grounds that both the Consignor and Consignee were non-existent.

Issue:

After the detention, the petitioner came forward as the owner of the goods and requested for release of goods under Section 129(1)(a) of the CGST Act.

However, the authorities have demanded penalty under Section 129(1)(b).

Relevant provisions are as below:

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-

  1. on payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;
  2. on payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;
  3. upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:

Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

Section 129(1)(a) and (b) of CGST Act w.e.f. 1st January 2022

Decisions Relied Upon:

Hon’ble High Court of Allahabad has relied upon the following decisions in this regard:

  1. M/s Sahil Traders v. State of U.P. and another, 2023:/AHC:116953-DB (Coram: Hon’ble Saumitra Dayal Singh, J. and Hon’ble Rajendra Kumar-IV, J.), wherein it was held that: “When the tax invoice and the E-way bill are produced by the assessee, the goods shall be treated as belonging to the assessee, who comes before the authorities as the owner of the goods and produces the above documents. Further, in such cases that the security is required to be in terms of Section 129(1)(a) and not under section 129(1)(b) of the CGST Act“.
  2. M/s Sanjay Sales Agency v. State of U.P. and another, 2023: AHC:193624-DB (Coram: Hon’ble Printinker Diwaker, CJ and Hon’ble Ashutosh Srivastava, J.), wherein the same principle has been followed.

Findings and Order:

Hon’ble High Court of Allahabad has held that:

  1.  It is clear that in the present case, goods were found with proper tax invoice and E-way bill belonging to the petitioner. Hence, Circular dated December 31, 2018 would apply and the petitioner would be deemed to be the owner of the goods.
  2. In light of above, the order passed by the authorities dated October 19, 2023 is quashed and set aside. The authorities are directed to carry out the exercise in terms of Section 129(1)(a) of the CGST Act within a period of three weeks from today.