The penalty order was passed due to inadvertent mistake i.e. invoice number stated as 235 in place of SAI/V/235.
The writ petition was allowed and penalty order was quashed.
The imposition of the penal consequences due to an exception, which has been caused on account of the inadvertent human error by not referring the invoice number as ‘SAI/V-235’ and by referring it to ‘235’ only. Since even the invoice number ‘235’ has been consistently maintained in all the documentations, which were made by the petitioner, since it never cleverly intended to evade the tax, or revenue of the State, the exception would fall to be within Clause 5 of the Circular dated 14th September, 2018.
Thus, the imposition made on account of the said human error, which has crept in invoice number is pardonable under Clause 5 of the Circular dated 14.09.2018.
FULL TEXT OF THE JUDGMENT/ORDER OF UTTARAKHAND HIGH COURT
A very short issue engages consideration in the present Writ Petition, where the petitioner has given a challenge to the order dated 20th August, 2019, which had been passed by respondent No.3, while exercising his power under Sub-section (1) of Section 129 of the Goods and Services Tax Act, as well as the appellate order dated 28th November, 2019, whereby the Appeal filed by the petitioner was dismissed, and consequently, affirming the imposition of the penalty, as it has been imposed by respondent No.3; by the impugned order dated 20th August, 2019, to the tune of Rs. 6,84,000/-.
2. It has been argued by the learned Senior Counsel for the petitioner, that if the impugned order itself is taken into consideration, and particularly, the details, which had been provided therein, the only reason which has been assigned for invocation of Section 129, had arisen because of the fact, that in the description of the invoice, the petitioner had escaped to refer the alphabetical figures, which was given therein, i.e. SAI/V235, but so far as other details required in the invoice document are concerned, pertaining to the tax invoice, the parties to the Writ Petition, are not in quarrel at all that the other details, for example, pertaining to the number of the way bill, the date of the way bill, the mode of delivery of the goods, the goods consigned, which was being carried, the vehicle number, in which it was being carried, all those details were correctly entered into the document supplied by the petitioner by way of GST MOV-07, except for the fact, that the invoice number was wrongfully mentioned as “235” instead of “SAI/V/235”.
3. The argument of the learned Senior Counsel for the petitioner is, that the said inadvertent error, which has chanced while giving the description of the invoice number, may not be read to a disadvantage, to him for the purposes of imposing the penalty of Rs.6,84,000/- because once the other figures, which were given therein commensurated to the transaction, given in the tax invoice and which is not disputed, it never intended to deceive the State of the revenue, which otherwise the petitioner was liable to pay, due to the transaction, which was referred to in the tax invoice.
4. Being aggrieved against the order passed by respondent No. 3, an Appeal was preferred before the Joint Commissioner, (Appeals), being Appeal No. APL02-13/19-2019-20, M/s Sonal Automation Industries Ltd. Vs. Assistant Commissioner.
5. Even, if the appellate order, is taken into consideration, and particularly the finding, which has been recorded, there is not even a single averment in the judgment except for the description of the waybill number, but the other statistics provided therein commensurated to the documentation of the tax invoice, which was submitted by the petitioner, as already observed above.
6. It has been argued by the learned Senior Counsel for the petitioner, that the wrongful incorporation of the tax invoice number as to be “235”, only, was never with an intention to deceive the State with the revenue, but rather it was a human error, which has inadvertently chanced, and which deserves to be ratified by invoking of provisions contained in the Circular No. 64//38/2018-GST/Dated 14th September, 2018, wherein, it had provided that if during the course of investigation of a vehicle, carrying the goods, if it is apprehended by the Investigating Team, certain minor discrepancies, which chances in the entries, which are made in the way bill or the tax invoices, are to be overlooked, prior to invocation of the provisions contained under Section 129 (1). But, however, the said Circular of 14th September, 2018, has been read to the contrary; to the detriment of the petitioner, contending thereof, that the description of the tax invoice number, as provided by the petitioner; though admittedly, it refers the same number as “235”, but the alphabetical figures, preceding invoice numbers were missing, hence, it was taken to the contrary to invoke the provisions contained under Section 129 and to oust the petitioner’s entitlement of protection provided by Circular of 14th September, 2018.
7. On the contrary, the learned Deputy Advocate General submits, that the benefit of the circular, which has been referred to in the Appellate Order and dealt with too also, will not be a protection, which would be available to the petitioner for the reason being, the scope of exemption, which could be considered to be extended to an assessee is contemplated under Clause 5 of the said Circular and the nature of error, which has been pointed out in the impugned orders, while giving the description of the invoice number, will not fall to be within the ambit of Clause 5 of the Circular dated 14th September, 2018.
8. This Court is of the view, that the implications of Clause 5 of the Circular, has to be rationally and logically construed and when the revenue was conscious, that a minor error may creep in while furnishing the e-way bill and those minor discrepancies are to be overlooked and Section 129, is not to be even invoked invariably, under all the circumstances, where it does not affect the financial implications or the liabilities, which has to be fastened upon the assessee under the Taxing Laws.
9. The Sub-clauses referred therein to Clause 5, has to be rationally construed and once the exception of mistake is considered to be excused under Clause 5 of the Circular of 14th September, 2018, and looking to the nature of the error, which has crept in, in the instant case, I am of the view, that since it was not backed with a clever intent to deceive the State of the revenue, and particularly, when the other figures or entries provided by the petitioner by submission of the e-way bill to the respondents/revenue, it contained all the other particulars, which were correct and corresponding to the details provided in the tax invoice, in fact, there was no apparent intention, as such to deceive the State with the revenue and hence, the error which has crept in giving the invoice number would fall to be within an exception Clause 5 of the Circular of 14th September, 2018.
10. The learned counsel for the State had made reference to a judgement of the Hon’ble Apex Court as reported in (2019) 7 SCC 703, Achal Industries Vs. State of Karnataka, and particularly, he makes reference to para 11 of the said judgement, which has provided that the Court cannot exercise the powers of an economic superiority, in determining the principle of levying of turnover taxes, on the assessee in pursuance to the commercial transaction, which in the said case was falling within the ambit Section 6-B (1) of Karnataka Sales Tax Act, 1957. Para 11 of the said judgment, which has been relied is extracted hereunder :-
“11. This Court also noticed the economic superiority principle for the purpose of levy of turnover tax while holding that the interpretation of statute would not depend upon contingency. It is trite law which the Court would ordinary take recourse to golden rule of strict interpretation while interpreting taxing statutes. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation and this is what has been considered by this Court in Commissioner of Customs Vs. Dilip Kumar and Company and Others 2018(9) SCC 1, in para 24 and 34 as under:
“24. In construing penal statutes and taxation statutes, the Court has to apply strict rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocents might become victims of discretionary decision making. Insofar as taxation statutes are concerned, Article 265 of the Constitution prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature.
34. The passages extracted above, were quoted with approval by this Court in at least two decisions being CIT v. Kasturi and Sons Ltd. (1999) 3 SCC 346 and State of W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 201 (hereinafter referred to as “Kesoram Industries case”, for brevity). In the later decision, a Bench of five Judges, after citing the above passage from Justice G.P. Singh’s treatise, summed up the following principles applicable to the interpretation of a taxing statute:
“(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency;
(ii) Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and
(iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of the legislature’s failure to express itself clearly.””
11. In fact, if the opening paragraph of the aforesaid judgement is taken into consideration, it was an aspect, where the charging Section was under consideration. The charging section, was pertaining to the charging of tax on the basis of the turnover of the assessee.
12. The scope of its interpretation has been limited only, qua applicability of the charging section; because of the economic superiority, which has been vested with the revenue for incorporation of a charging section. But here, since the issue involved is not factually akin to the one, which has been settled by the Hon’ble Apex Court in the case of Achal Industries (Supra), the same would not be applicable in the present case.
13. Hence, the imposition of the penal consequences due to an exception, which has been caused on account of the inadvertent human error by not referring the invoice number as “SAI/V-235” and by referring it to “235” only. Since even the invoice number “235” has been consistently maintained in all the documentations, which were made by the petitioner, since it never cleverly intended to evade the tax, or revenue of the State, the exception would fall to be within Clause 5 of the Circular dated 14th September, 2018.
14. Thus, the imposition made on account of the said human error, which has crept in in invoice number is pardonable under Clause 5 of the Circular dated 14.09.2018.
15. Thus, for the aforesaid reasons, the Writ Petition is allowed and the impugned order dated 20th August, 2019, and the appellate order dated 28th November, 2019, is hereby quashed.
16. The learned Senior Counsel submits, that as a consequence of imposition of the penalty in pursuance to the impugned order, since the same already stands deposited with the Revenue. The said amount may be directed to be refunded in the light of the judgement rendered today by allowing the Writ Petition.