Allahabad High Court Quashes GST Penalty for Minor PIN Code Error, No Intention of Tax Evasion:

Allahabad High Court Quashes GST Penalty for Minor PIN Code Error, No Intention of Tax Evasion The Allahabad High Court quashed the GST penalty and seizure imposed for a wrongly entered PIN code, holding it was a minor clerical error with no tax evasion, and ordered a refund. The present case has been filed by M/S Ashok Kumar Maganbhai Patel in the Allahabad High Court, challenging an order passed by the Additional Commissioner on November 22, 2024, along with the demand reference no. 23.11.2024.

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The order in question imposed a penalty of Rs. 21,98,870 and seized goods in transit from Gujarat to West Bengal. The seizure took place because the PIN code of the “ship to” address was entered incorrectly on the tax invoice, although the rest of the address and documents were all correct. The taxpayer argued that he did not try to evade any tax evasion; instead, it was just a technical error and a minor mistake. In support of his argument, the taxpayer also cited a circular passed on September 14, 2018, by the Ministry of Finance, which says that if the consignor and consignee addresses are correct, a wrong PIN code alone is not enough reason to initiate proceedings under Section 129 of the CGST Act.

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When the court analysed the arguments of both sides, it observed that the goods were properly accompanied by an invoice, e-way bill, and other required documents, and there was no other mistake. To announce its final decision, the court also referenced an earlier judgment of the Supreme Court in the case of Usha Martin Industries (supra), in which the apex court ruled that government circulars are binding on subordinate authorities. In the final decision, the court concluded that the decision of goods confiscation and penalty imposition by the tax authorities was not justified. Since the mistake made by the taxpayer was so minor, additionally, there was no intention to evade tax. The court allowed the writ petition, set aside the penalty and seizure orders, and directed that any amount deposited by the petitioner be refunded.