Case Law Details
Nanhey Mal Munna Lal Vs Additional Commissioner And Another (Allahabad High Court)
In the case of Nanhey Mal Munna Lal vs. Additional Commissioner, the Allahabad High Court reviewed a penalty imposed under Section 129(3) of the Goods and Services Tax Act, 2017. The petitioner challenged an order by the Additional Commissioner that seized goods due to a discrepancy between the dates on the tax invoice and e-way bill. The petitioner argued that the date mismatch was a minor typographical error and not indicative of tax evasion. The Additional Chief Standing Counsel for the state supported the impugned order, citing potential bogus transactions. However, the court determined that the date error did not suggest any intent to evade tax, as both the buyer and seller were duly registered and active. Citing precedents, including the M/S Cavendish Industries Ltd. case, the court concluded that the penalty for such a minor error was unjustified. The court quashed the penalty and ordered the refund of any amounts deposited by the petitioner, emphasizing that surmises and conjectures should not form the basis for tax penalties. The writ petition was thus allowed, and the penalty order was set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the petitioner and Sri Ravi Shankar Pandey, learned Additional Chief Standing Counsel for the State-respondents.
2. Since no Tribunal has been formed in the State of U.P., the present writ petition is entertained by this Court under Article 226 of the Constitution of India.
3. By means of present writ petition, the petitioner has assailed the order dated 25.02.2021 passed by respondent no.1-Additional Commissioner Grade-2 (Appeal)- Vth, Commercial Tax, Kanpur in Appeal No. GST-35/2022 for Assessment Year 2019-20 under the provisions of Section 129 (3) of Goods and Services Tax Act, 2017.
4. Learned counsel for the petitioner submits that the petitioner has received an order for supply of M.S. Bar from M/s. Shri Radhey Enterprises, Ghaziabad. After receipt of the said order, the petitioner placed an order to the M/s. Trimbakeswar Steels for supply of M.S. Bar and directed the supplier i.e. M/s. Trimbakeswar Steels to send the goods directly to M/s Shri Radhey Enterprises.
5. He further submits that both the purchaser and the seller have duly been granted GSTIN while the goods in transit was intercepted on 15.02.2020 and the authorities have detained the goods and passed the seizure order on the ground that the date mentioned in ‘Tax Invoice’ and on the ‘E-way Bill’ are different i.e. 15.02.2020 was mentioned in the tax invoice and in e-way bill, the date was mentioned as 11.02.2020. He next submits that further inference has been drawn against the petitioner is that the selling and the purchaser dealer are not bona-fide and the seller’s registered address disclosed by M/s. Trimbakeswar Steels, Raipur as Flat as F-501 Avinash Ashiana near Phase-4, Kabir Nagar, Raipur.
6. He further submits that the parties have duly been registered and are active, in support thereof, the checked status of the selling dealer namely M/s. Trimbakeswar Steels, which is annexed as Annexure No. 10 at Page No. 54 and M/s Nanhey Mal Munna Lal i.e. purchaser at Page No. 55, the said fact has also specifically been mentioned in para nos. 33 & 34 of the preset writ petition, which has not been denied in para no. 32 of the counter affidavit. He further submits that when the purchaser and the seller have duly been registered and their registrations are active, no adverse inference can be drawn against the petitioner. He prays for allowing the present writ petition.
7. Per contra, Sri Ravi Shankar Pandey, learned Additional Chief Standing Counsel supports the impugned order and submits that there are materials against the petitioner which shows that the transactions in question are bogus as the dates on E-way Bill and Tax Invoice are different. Further, the bona-fide of selling dealer was doubted by the Mobile Squad on inspection. He prays for dismissal of the present writ petition.
8. After hearing the parties and on perusal of the records, it transpires that there is only a mistake of mentioning the date on E-way Bill and Tax Invoice, which is a bona-fide typographical error on the part of person who generated the same, as such, it’s a minor error, therefore it cannot be held that there was mens rea of evading tax, which is essential for imposing penalty.
9. This Court in the case of M/S Cavendish Industries Ltd. Vs. State of U.P. and 3 Others (Writ Tax No. 697 of 2020), specifically in para nos. 5 & 6 has quashed the penalty and directed to refund the amount, which reads as under:-
“5. This Court in M/s Hindustan Herbal Cosmetics v. State of U.P. and Others (Writ Tax No.1400 of 2019 decided on January 2, 2024) held that mens rea to evade tax is essential for imposition of penalty. The factual aspect in the present case clearly does not indicate any mens rea whatsoever for evasion of tax. The goods were accompanied by the relevant documents. The relevant paragraph of the said judgment reads as under:
“8. Upon perusal of the judgments, the principle that emerges is that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. In the case of M/s. Varun Beverages Limited (supra) there was a typographical error in the e-way bill of 4 letters (HR ? 73). In the present case, instead of ‘5332’, ‘3552’ was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, I am of the view that imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law.”
6. In light of the above, I am of the view that the finding of the authorities with regard to intention to evade tax is not supported by the factual matrix of the case, and accordingly, the impugned orders dated February 22, 2020 and March 19, 2020 are quashed and set aside.”
10. In view of the above referred judgment, the ground of mentioning wrong date in the E-way Bill cannot be drawn against the petitioner. Further, the material has been brought on record as Annexure No.10 to the present writ petition, that selling dealer is having active GSTIN and the said fact has not been disputed by the respondents in the counter affidavit. Furthermore, merely because Trimbakeswar Steels i.e. the selling dealer has shown the office in some flat, will not entitle the respondents to draw any adverse inference against the petitioner until and unless, some cogent material has been brought on record.
11. The record reveals that the inference has only been drawn against the petitioner on surmises and conjectures, which cannot be permitted in the eye of law. Therefore, no adverse inference can be attributed to the petitioner with regard to evasion of tax.
12. In view of the above facts and circumstances of the case as well as looking to the afore-quoted judgment, the impugned order cannot sustain and the same is set aside.
13. The writ petition is allowed, accordingly.
14. Any amount deposited by the petitioner in pursuance of the impugned order shall be refunded to the petitioner within a month from today.
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