Mere mention of Wrong Dispatch Location In E-Waybill Not Ground For Penalty

Mere mention of Wrong Dispatch Location In E-Waybill Not Ground For Penalty, No Tax Evasion Found Seizure and Penalty Order To Be Set Aside: Allahabad High Court

In a significant ruling, the Allahabad High Court has held that a mere technical error in mentioning the dispatch location in an e-way bill does not warrant seizure of goods or imposition of penalty under Section 129 of the CGST/SGST Act, especially when there is no intent to evade tax or any discrepancy in the goods. This decision, made in the case of M/S SAUMYA THROUGH ITS PARTNER, SHRI GHANSHYAM POPAT VERSUS UNION OF INDIA AND 3 OTHERS (WRIT TAX No. 664 of 2025, dated 14.07.2025), emphasizes that procedural lapses without substantive irregularities should not lead to punitive consequences.

Facts of the Case: The petitioner generated a tax invoice and an e-way bill on June 5, 2023, for the supply of goods from Maharashtra to Himachal Pradesh. The goods were intercepted on June 6, 2023, after the truck driver stated that the goods were loaded from Nagpur, while the e-way bill incorrectly listed Chandrapur as the dispatch location. The petitioner clarified that Chandrapur is their principal place of business, and Nagpur is an additional registered place of business. The discrepancy was attributed to a technical error during the e-way bill generation, where Chandrapur was inadvertently filled instead of Nagpur.

Despite this explanation, authorities imposed IGST and a penalty, which was upheld on appeal. The petitioner then challenged these orders before the High Court. It was confirmed that there were no discrepancies in the quantity, quality, value, or taxability of the goods, nor was there any evidence of intent to evade tax.

Issue Presented: The core issue was whether a mere technical error in the e-way bill regarding the place of dispatch—when the actual dispatch location is a registered additional place of business and no tax evasion is alleged—could justify the seizure of goods and the levy of tax and penalty under the CGST/SGST Acts.

High Court’s Ruling: The Allahabad High Court found that the sole basis for the seizure was the truck driver’s statement about the loading location differing from the e-way bill. The Court noted that Nagpur was a validly registered additional place of business, and the mention of Chandrapur was merely a technical error.

The Court referenced its previous judgment in M/s Zhuzoor Infratech Pvt. Ltd., where a similar mistake was deemed insufficient to invoke penal provisions without an intent to evade tax. The Court reiterated that the purpose of the e-way bill is to ensure traceability and prevent tax evasion, not to penalize bona fide errors in genuine and tax-compliant transactions.

Ultimately, the Court concluded that the record showed no discrepancies in the goods, nor any concealment or fraudulent behavior by the petitioner. It explicitly stated that “Merely on technical ground that in the e-way bill accompanying with the goods in question, the place of shipment has wrongly been mentioned, the seizure or levy of penalty cannot be made”.

Consequently, the writ petition was allowed, and both the original and appellate orders imposing the penalty were quashed. The Court also directed that any amount deposited by the petitioner during the proceedings be refunded within one month of producing a certified copy of the judgment.

Key Takeaways from the Judgment:

• Technical Errors vs. Tax Evasion: The judgment clearly distinguishes between minor technical errors in e-way bills and actual intent to evade tax. A mere clerical mistake, without evidence of a deliberate attempt to avoid tax, should not lead to punitive measures.
• Absence of Discrepancy in Goods: The ruling highlights the importance of checking for discrepancies in the goods themselves (quantity, quality, value, taxability). If the goods are in order and the transaction is genuine, a technical error in the e-way bill alone is not a sufficient ground for seizure or penalty.
• Purpose of E-way Bill: The Court reinforced that the primary objective of the e-way bill system is to facilitate traceability and prevent tax evasion, not to penalize genuine transactions for minor procedural flaws.
• Refund of Deposited Amount: The directive for a refund of any deposited amount within a month upon submission of a certified copy of the judgment provides a clear recourse for businesses unfairly penalized due to technical errors.
• Procedural Lapses vs. Substantive Irregularities: This ruling underscores the principle that procedural lapses, in the absence of substantive irregularities, should not result in punitive consequences. It offers significant relief to taxpayers who may face penalties due to minor administrative oversights rather than fraudulent intent.