M/s. Mataji Industries Vs Joint Commissioner of Commercial Taxes (Appeals) (Karnataka High Court)
Clerical error cannot justify confiscation under section 130 of CGST Act 2017 without intent to evade tax Karnataka High Court
The Karnataka High Court recently ruled that a clerical error in a tax invoice cannot justify the confiscation of goods and the imposition of taxes, penalties, and fines without proof of intent to evade tax. This decision arose from a case involving M/s Mataji Industries, a supplier of dry grapes, whose consignment was intercepted due to a typographical error in the tax invoice that mistakenly listed “copra” instead of “dry grapes” at one line item.
Upon physical verification, authorities confirmed the presence of only dry grapes, and the corresponding e-way bill also accurately described the goods as dry grapes. Despite the Petitioner demonstrating that all applicable taxes had been paid and presenting supporting documents, including the tax invoice, packing list, and bill of entry, the authorities proceeded with confiscation under Section 130 of the CGST Act, alleging an attempt to evade tax. The initial confiscation order and the subsequent appellate decision were challenged by M/s Mataji Industries.
The High Court observed that the discrepancy was a clear typographical error, and the department failed to provide any evidence to suggest that the Petitioner intended to evade tax. The court emphasized that the burden of proof to establish tax evasion intent lies with the tax authorities when the error is merely clerical. Finding no such intent or supporting evidence from the department, the court quashed both the original confiscation order and the appellate order. Consequently, the court directed the department to refund the amount collected from M/s Mataji Industries, reinforcing that clerical mistakes alone cannot trigger such severe penalties without a proven fraudulent intent.
