GST: Technical Error in E-Way Bill Not Grounds for Seizure, High Court

This case is about how Goods and Services Tax (GST) rules should be applied when businesses make minor mistakes in paperwork. The decision focused on whether a simple technical mistake, without any intention to cheat, should result in heavy penalties or seizure of goods.

The issue began when GST officials intercepted a truck belonging to a company named M/s Saumya near Mathura (Uttar Pradesh) carrying goods that were being transported to Himachal Pradesh. The GST officials verified their GST e-way bill. This bill is used to track the goods and make sure proper tax is paid.

The issue was that the place of dispatch of goods listed on the e-way bill was Chandrapur, Maharashtra, but the goods were actually loaded from Nagpur, Maharashtra. Because of this misalignment, the tax authorities felt the possibility of tax evasion. Hence, the tax authorities seized the goods, imposed Integrated GST (IGST), and charged a penalty under Section 129 of the CGST Act (which deals with transporting goods without proper documents or with intent to evade tax).

M/s Saumya explained to the court that the goods were legally owned and transported. The only mistake was that the e-way bill showed Chandrapur instead of Nagpur as the dispatch point. All taxes had been paid, and the transaction could be clearly seen and verified on the GST portal. There was no real intention to evade tax at all.

The case was heard by Justice Piyush Agarwal of the Allahabad High Court. The judges made the following observations:

• The judge said that the main purpose of an e-way bill is to track goods and ensure tax is paid correctly, not to punish businesses for every small clerical error.
• The court noted that the e-way bill was valid, not an expired or cancelled one.
• There were no issues with the quantity or type of goods, and the invoices were all correct.
• The only problem was a minor technical error in the dispatch address, which was not significant enough to suspect fraud or dishonesty.

The court took reference from previous cases of M/s Zhuzoor Infratech Private Limited, where the court ruled that technical errors alone cannot lead to seizure and penalties.

One judgement of the Supreme Court titled Assistant Commissioner (ST) vs. M/s Satyam Shivam Papers Pvt. Ltd., in which the court ruled that for a penalty under Section 129, there must be proof that the person was trying to avoid paying tax.

As a result, the Allahabad High Court quashed the seizure and penalty order. Further, the authorities should not take harsh actions unless there is clear evidence of tax evasion. It ordered the government to refund any money taken from M/s Saumya within one month.