Minor discrepancy in the e-way bill would not attract penalty proceedings

The Hon'ble Allahabad High Court in M/s. Varun Beverages Limited. v. State of U.P. and Ors. [Writ Tax No. - 958 of 2019 dated February 2, 2023] has set aside the order imposing the penalty upon the assessee, on the grounds that, there was no intention on the part of the assessee to evade taxes. Held that, minor discrepancy in mentioning the registration number of the vehicle in the e-way bill would not attract proceedings for penalty under Section 129 of the Central Goods and Services Tax Act, 2017 ("the CGST Act").

Facts

M/s. Varun Beverages Ltd. ("the Petitioner") is engaged in the business of manufacturing and sale of aerated water, fruit juice based drinks etc ("the Goods"). The Petitioner was making a stock transfer from its Greater Noida depot to a sale depot at Agra through a truckaccompanying delivery challan, e-way bill and bilty on June 10, 2018. The Revenue Department ("the Respondent") intercepted the Goods and detained the vehicle on June 10, 2018, on the grounds that the vehicle number mentioned in the e-way bill was different. 

Subsequently, the Respondent passed the detention order on June 11, 2018 and an Order-in-Original dated June 12, 2018 ("the OIO") under Section 129(3) of the CGST Act, imposing tax and penalty of INR 3,73,668/-. The Petitioner had preferred an appeal before the Appellate Authority but the same was dismissed vide Order-in-Appeal dated July 1, 2019 ("the OIA").

Being aggrieved, this petition has been filed.

The Petitioner has contended that it was a case of stock transfer bythe Petitioner from its unit at Greater Noida to sale depot at Agra and theGoods were accompanied by necessary documents and the only mistake was the entry of the wrong vehicle number in the e-way bill. Further, there was no intention to evade taxes.

The Respondent contended that a minor mistake in entering details of the vehicle in the e-way bill can be ignored, but where the entire digit as has been entered inthe e-way bill is not matching with the vehicle in transit, thus, the explanation afforded by the Petitioner cannot beaccepted.

Issue

Whether the wrong mention of vehicle number through which the Goods were in transit would be considered as a human error?

Held

The Hon'ble Allahabad High Court in Writ Tax No. - 958 of 2019 held as under:

• Noted that, the mistake of in the e-way bill wasas far as the registration of the vehicle in a particular State, wherein UP-13 instead of HR-73 was mentioned. However, the remaining number of the vehicle was same and further the bilty mentioned the correct vehicle registration number.
• Further noted that, it was a case of a stock transfer and there was no intention on the part of the Petitioner to evade taxes.
• Observed that, the Respondent had not placed any other material so as to bring on record that there was any intention on the part of the Petitioner to evade tax except the wrong mention of part of registration number of the vehicle in the e-way bill.
• Held that, the minor discrepancy in mentioning the registration number of the vehicle in the e-way bill would not attract proceedings for penalty under Section 129 of the CGST Act and the OIO as well as the OIA cannot be sustained.
• Set aside the OIO and the OIA.

Relevant Provisions

Section 129 of the CGST Act

"Detention, seizure and release of goods and conveyances in transit –  

(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,––

(a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty;

(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:
Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.

(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).

(4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.

(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.

(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):

Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less:

Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer."