Incorrect Address on E-way bill a mere technical error: HC Deletes Penalty

In the matter of M/S Hawkins Cookers Limited V/s State Of U.P. And 2 Others WRIT TAX No. – 739 of 2020 Allahabad High Court held that when goods were accompanied with the relevant invoices, bilty documents and the e-way bills. Merely e- way bills had the incorrect address but the invoices and bilty documents contain the correct address of the destination. In such a case, no presumption to evade tax arises at all. The mere technical error committed by the petitioner cannot result in imposition of such harsh penalty upon the petitioner.

Facts of the case:

• The petitioner had purchased the raw materials, from various suppliers situated in Maharashtra.
• Petitioner, thereafter, stock transferred certain raw materials from Maharashtra, for being delivered to its factory.
• In four out of the 8 E-Way bills, the place of supply has been correctly mentioned to be the factory of the petitioner situated at Satharia, Jaunpur. In the other 4 E-Way bills, the place of supply has been wrongly mentioned to be the principal place of business of the petitioner situated at Kanpur, where no manufacturing is done.
• The reason for the aforesaid mistake having been done by some of the parties is that on filling the GSTIN (registration number) of the petitioner while generating the E-Way bill, the principal place of business is automatically reflected in the place of supply (which is auto populated).
• It is the duty of the person generating the E-Way bill to change the place of supply if the same is different from the principle place of business.
• The goods were intercepted and the memo of detention was issued and subsequently the goods were seized by issuing MOV-06.

Contention of Petitioner:

Due to an inadvertent error/overlooking by the accountants of the suppliers who generate the E-Way bill, they failed to change the place of supply which is automatically displayed. Thus the E-Way bills have been generated containing the wrong place of supply of goods at Kanpur instead of Satharia, Jaunpur. The delivery of raw materials cannot be taken by the petitioner at Kanpur, since the raw materials are required for manufacturing of pressure cookers which is done only at its factory in Satharia, Jaunpur, and not at the principal place of business. Thus the mentioning of wrong place of supply in the E-Way bill was merely a technical breach.

It was submitted that the same was a technical error only as there was no intention of the petitioner to hide the destination in the e-way bills. Infact, all the invoices and the bilties that were accompanying the goods bear the correct address of destination that is Jaunpur. The mistake committed in the four e-way bills with regard to mentioning of the registered office of the petitioner can only be seen as a clerical and typographical error and nothing more.

Contention of Department:

The department submitted that the error/mistake in this case was grave in nature and raised a presumption of evasion of tax.

Observations:

• Undisputedly, the address in four of the e-way bills was incorrect. However, what is to be seen is that this particular address was not an anonymous address, but was the address of the registered office of the petitioner. The explanation provided by the petitioner with regard to a mistake on the part of the supplier to have populated the incorrect address is not far fetched, especially since the correct addresses were mentioned in all the eight invoices and the eight bilties.
• From the above factual matrix, it does not appear that there was any intention whatsoever to evade tax.

Order:

11. As held by this Court in umpteen cases, where penalty is being imposed under Section 129 of the Act an intention to evade tax should be present. Now, such an intention to evade tax may be presumed by the department in cases where there is wholesole disregard of the Rules. For example, in the event the goods are not accompanied by the invoice or the e-way bill is completely absent, a presumption may be raised that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods. However, when most of the documents are accompanied with the goods and there are some typographical and/or clerical error, a presumption to evade tax does not arise. It is then upon the department to indicate that there was an intention to evade tax.

12. In the present case, it is palpably clear that the goods were accompanied with the relevant invoices, bilty documents and the e-way bills. It is to be noted that the invoices and bilty documents also contain the correct address of the destination and only four out of eight of the e- way bills had the incorrect address. Even this incorrect address was the registered office of the petitioner. In such a case, no presumption to evade tax arises at all. The mere technical error committed by the petitioner cannot result in imposition of such harsh penalty upon the petitioner. As quoted in the Arthashastra by Chanakya that ‘Governments should collect taxes like a honeybee collects honey from a flower without disturbing its petals.’

13. In the light of the above, I am of the view that the penalty imposed in this particular case is without any basis in law, and accordingly, impugned penalty order dated February 14, 2020 and the order passed in appeal dated October 13, 2020 are quashed and set aside.