Mistake in E-Way Bill During Stock Transfer Cannot Be Attributed to Tax Evasion: Allahabad HC:

Mistake in E-Way Bill During Stock Transfer Cannot Be Attributed to Tax Evasion: Allahabad HC The Petitioner, Gail (India) Ltd., is a company engaged in the processing and distribution of gas, and it also manufactures plastic granules using gas as raw material. The petitioner has its manufacturing units across various locations in India. In 2014, one of the manufacturing units in Raigarh was closed, and the plant and machinery installed at that unit were moved to the other unit in Auraiya, Uttar Pradesh. The petitioner had prepared 2 tax invoices and a delivery challan. However, while generating the e-way bill, two errors occurred: the value of the tax invoice was added together, 18% GST was added and one digit of the truck number was incorrectly mentioned.

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Due to this, the goods were detained in UP, and the tax authorities claimed that there was a mismatch in the date of the gate pass and the consignment note. The authorities cited discrepancies in the documents and passed an order dated 24.01.2020 under Section 129(3) of the CGST Act, seizing the goods. The petitioner company filed a writ before the Allahabad High Court challenging the order. The petitioner argued that it was just a technical error and all the documents were accompanying the goods, except for the e-way bill. It further submitted that it was just a stock transfer, not a sale or service. The High Court noted that since the petitioner was transferring old machinery to its Pata Unit, and there was no sale of goods, it cannot be said that the petitioner was trying to evade taxes. The court cited previous judgements, such as D&D Construction and Developers Company (supra), where it was concluded that if the machinery is being transferred from one unit to another and there is a mistake, it cannot be attributed to tax evasion as the sale is not involved. Further, in the case of Vishnu Singh (supra), it was held that if a technical error occurs in the e-way bill without a discrepancy in goods or intention to evade tax, the GST penalty under section 129 (3) is bad in law.

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Therefore, the High Court quashed the GST order and directed the authorities to refund any amount taken from the petitioner.