Summary: The Madras High Court, in M/s. Jindal Pipes Limited v. Deputy State Tax Officer (July 25, 2024), ruled that penalties under Section 129 of the CGST Act should not be imposed for minor discrepancies between tax invoices and E-way bills, such as differences in location addresses or pin codes. In this case, Jindal Pipes Limited faced a penalty for a consignment where the tax invoice and E-way bill mentioned different addresses. The Court noted that the discrepancies were technical in nature—arising from the company’s use of different locations for billing and dispatch—and did not involve any tax evasion intent. Referring to Circular No. 64/38/2018-GST, the Court emphasized that proceedings under Section 129 should not be initiated for minor errors like incorrect pin codes, provided the correct address is mentioned. The Court underscored that the GST framework aims to avoid unjust taxation burdens on compliant taxpayers, and thus, the penalty was set aside. This judgment aligns with previous rulings where technical errors without intent to evade tax were deemed insufficient grounds for penalties.
Introduction: The Hon’ble Madras High Court in the case of M/s. Jindal Pipes Limited v. Deputy State Tax Officer [W.P. (MD) No. 17211 of 2024 dated July 25, 2024] held that, penalty under Section 129 of the Central Goods and Services Tax Act (“the CGST Act”) is not imposable when discrepancy relates to stating of different location addresses of same recipient, thereby stating that the philosophy under the respective GST enactments is not to levy unjust tax and burden on assessee, who is otherwise regular in paying tax and complies with the law.
Facts:
Jindal Pipes Limited (“the Petitioner”) filed a writ petition against order dated September 05, 2023 (“the Impugned Order”) passed by the State Revenue Department (“the Respondent”) wherein the penalty was imposed on the consignment carried in conveyance. It is stated that the goods carried in the aforesaid conveyance are accompanied by tax invoice and E-Way bill. However, there was a discrepancy between the PIN code of the Petitioner in the tax invoices and the E-Way Bill. Also, the address stated in the invoice and E-Way bill is different.
Issue:
Whether penalty under Section 129 imposable when discrepancy relates to stating of different location addresses of the same recipient?
Held:
The Hon’ble Madras High Court in the case of W.P. (MD) No. 17211 of 2024 held as under:
- Noted that, the discrepancy relating to Pincode in the invoice and E-Way bill is minor violation and thereby, penalty should not be imposed, taking into consideration contents of para no. 5(b) of Circular No. 64/38/2018-GST dated September 14, 2018 (“the Circular”) wherein it is stated that proceedings under Section 129 of the CGST Act, should not be initiated in case where there is error in pincode subject to the condition that the address is correct.
- Further noted that, the discrepancy relating to address in the invoice is on account of the difference in the Head Office and the actual place from which the delivery was made as the petitioner has a separate office from where the Tax Invoices are raised, whereas the despatches are made from the godown where the pipes manufactured by the Petitioner’s factory are stored.
- Opined that, penalty under Section 129(5) of CGST Act on account of technical breach of provision or minor discrepancy relating to the difference in the address stated in the tax invoice and E-Way bill.
- Further opined that, the philosophy under the respective GST enactments is not to levy unjust tax and burden on assessee, who is otherwise regular in paying tax and complies with the law.
- Held that, the Impugned Order is liable to be set aside.
Relevant extract of the Circular:
Para no. 5 of Circular No. 64/38/2018-GST dated September 14, 2018
“5. Further, in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:
a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
d) Error in one or two digits of the document number mentioned in the e-way bill;
e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
f) Error in one or two digits/characters of the vehicle number.”
Our Comments:
The Hon’ble Allahabad High Court in the cases of M/s. Modern Traders v. State of UP and Ors. [Writ Tax No. 763 of 2018 dated May 09, 2018], M/s. Galaxy Enterprises v. State of UP and Ors. [Writ Tax No. 1412 of 2022 dated November 06, 2023], M/s. Hindustan Herbal Cosmetics v. State of UP and Ors [Writ Tax No. 1400 of 2019 dated January 02, 2024] and M/s. Spirare Energy (P) Ltd. v. State of UP [Writ Tax No. 391 of 2020 dated February 02, 2024] interlalia held that, presence of mens rea for evasion of tax is a necessary ingredient for imposition of penalty under Section 129 of the CGST Act and mere technical error should not lead to imposition of penalty as there is no element of mens rea.
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