No penalty for Unfiled Part B of E-way bill due to technical difficulties

Precision Tools India Vs State of Uttar Pradesh (Allahabad High Court)

No penalty shall be imposed in cases where Part B of the E-way bill remains unfiled due to technical difficulties

The Hon’ble Allahabad High Court in the case of Precision Tools India v. State of Uttar Pradesh [Writ Tax No. 415 of 2023 dated January 29, 2024] held that non-filling of Part ‘B’ of the E-Way Bill on technical difficulties and without any intention to evade tax would not lead to the imposition of penalty.

Facts:

Precision Tools India (“the Petitioner”) dully filled part A of the e-way bill and due to some technical difficulties, part B of the e-way bill could not be generated. The goods in question were personal-made goods with exclusive specifications that were supplied to the Railways and such goods could only be supplied to the particular consignee. The Proper Officer without finding any defect in the consignment note nor any discrepancy in the documents, passed an order of penalty dated April 22, 2021 (“the Impugned Order”) under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (“the UPGST Act”).

Thereafter, the Petitioner filed an appeal before the Appellate Authority (“the Respondent”) and an order dated November 20, 2021 (“the Impugned Order”) was passed under Section 107 of the UPGST Act.

Issue:

Whether penalty can be levied if Part B of the E-way bill is not filed due to technical difficulties?

Held:

The Hon’ble Allahabad High Court in Writ Tax No. 415 of 2023 held as under:

• Observed that, the Respondent has been unable to indicate any intention of the Petitioner to evade tax.
• Relied on, M/s. Roli Enterprises v. State of U.P. and Others [Writ Tax No.937 of 2022 dated January 16, 2024] wherein the Court had considered two judgments of the Allahabad High Court in VSL Alloys (India) Pvt. Ltd. v. State of U.P. and another [2018 NTN [Vol.67]-1] and M/s Citykart Retail Private Limited through Authorized Representative v. Commissioner Commercial Tax and Another [2023 U.P.T.C. [Vol.113]-173] and held that non-filling up of Part ‘B’ of the e-Way Bill by itself without any intention to evade tax would not lead to the imposition of penalty under Section 129(3) of the UPGST Act.
• Held that, the defect was technical only and without any intention to evade tax. Accordingly, the penalty imposed under Section 129(3) of the UPGST Act is unsustainable. The Impugned Orders were quashed and set aside. The writ petition was allowed.

Our Comments:

Section 129 the Central Goods and Services Tax, 2017 (“the CGST Act”) talks about “Detention, seizure and release of goods and conveyances in transit”. According to Section 129 (3) of the CGST Act, 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.

However, in the present case, the Proper Officer imposed a penalty under Section 129(3) of the CGST Act on the Petitioner because PART B of E-way was not filed although, no discrepancy was found in the documents provided during the transit of goods by the Petitioner.  Thus, the Allahabad High Court held that the defect was technical only and without any intention to evade payment of tax. Thus, the penalty cannot be imposed.

In Pari Materia case, the Hon’ble Allahabad High Court in the case of M/s. Varun Beverages Ltd. v. State of Uttar Pradesh [Writ Tax No. 129 of 2024 dated February 07, 2024], wherein the invoices containing the vehicle number in which the goods were being transported and only part B of the e-way bill could not be generated. The department could not indicate any intention of the petitioner to evade tax, the court set aside the orders imposing penalty under Section 129(3) of the UPGST Act on the reason that the defect was of a technical nature only and without any intention to evade tax.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

(Judgement dictated in Open Court)

1. Heard Ms. Upasana Agarwal, learned counsel holding brief of Sri Shubham Agarwal, learned counsel appearing on behalf of the petitioner and learned counsel appearing on behalf of the respondents.

2. In the present petition, the writ petitioner is aggrieved by the order of penalty dated April 22, 2021 passed under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as “the UPGST Act”) and the order of the Appellate Authority dated November 20, 2021 passed under Section 107 of the UPGST Act.

3. The grounds raised by Ms. Agarwal are that part A of the e-way bill was dully filled and due to some technical difficulties part B of the e-way bill could not be generated. She furthermore, submitted that the goods in question were personal made goods with exclusive specification that was supplied to the Railways and such goods could only be supplied to the particular consignee. She further submitted that there was no defect in the consignment nor any discrepancy in the documents. She relied upon judgment of this Court in M/S Roli Enterprises Vs. State of U.P. and Others (Writ Tax No.937 of 2022 decided on January 16, 2024) wherein this Court had considered two judgements of the Allahabad High Court in VSL Alloys (India) Pvt. Ltd v. State of U.P. and another reported in 2018 NTN [Vol.67]-1 and M/s Citykart Retail Private Limited through Authorized Representative vs. Commissioner Commercial Tax and Another reported in 2023 U.P.T.C. [Vol.113]-173 and held that non filling up of Part ‘B’ of the e-Way Bill by itself without any intention to evade tax would not lead to imposition of penalty under Section 129(3) of the UPGST Act.

4. Per-contra, learned counsel appearing on behalf of the respondents has relied upon the penalty order as well as the order passed by the Appellate Authority to indicate that part ‘B’ of the e-Way Bill was not filled up.

5. Upon consideration of the arguments made by counsel appearing on behalf the parties and upon perusal of the documents, it is clear that the department has been unable to indicate any intention of the petitioner to evade tax.

6. Furthermore, judgement relied upon by the petitioner are directly on the point and, accordingly, I see no reason to defer from the same.

7. In the present case also, the defect was of a technical nature only and without any intention to evade tax. Accordingly, the penalty imposed under Section 129(3) of the UPGST Act is unsustainable.

8. In light of the above, the orders dated April 22, 2021 and November 20, 2021 are quashed and set aside. The writ petition is allowed. Consequential reliefs to follow. The respondents are directed to return the security to the petitioner within six weeks.

Conclusion: The judgment underscores the importance of discerning intent in tax-related matters. Despite the technical lapse in filing Part ‘B’ of the E-Way Bill, the court found no deliberate attempt to evade taxes. This ruling sets a precedent for similar cases, emphasizing fairness and proportionality in penalty imposition under tax laws.

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