MP High Court Upholds 100% GST Penalty for Wrong Destination in E-Way Bill

The petitioner, Amara Raja Batteries Limited, a GST-registered manufacturer of lead-acid batteries, challenged a notice dated 01.03.2019 and the appellate order whereby a penalty under Section 129 of the Madhya Pradesh Goods and Services Tax Act, 2017, was imposed and upheld. The dispute arose when a consignment of 56 batteries transported from Ahmedabad to Jabalpur was intercepted by GST authorities on 01.03.2019.

While the invoices and consignment notes correctly mentioned Jabalpur as the destination, the e-way bill generated on 26.02.2019 wrongly mentioned Indore as the destination due to an admitted error by the petitioner’s employee. The goods were seized and released upon payment of a penalty equal to the tax amount of Rs. 2,17,305/-, which the petitioner deposited under protest. The statutory appeal under Section 107 was dismissed, leading to the present writ petition seeking the quashing of the penalty and refund of the amount.

Central Issue: Whether a 100% penalty under Section 129 of the GST Act can be sustained when the e-way bill contains a wrong destination city despite correct invoices and admitted payment of tax.

HC’S Decision: The Madhya Pradesh High Court dismissed the writ petition, holding that the error in the e-way bill was not a minor or clerical mistake covered by Clause 5(c) of the CBIC Circular dated 14.09.2018. The Court observed that the entire destination city was wrongly mentioned, and the truck was intercepted far beyond the destination stated in the e-way bill. It was held that the petitioner had sufficient time to correct the e-way bill but failed to do so, and had not produced independent records to substantiate the claim that the goods were intended for Jabalpur.

The Court further noted that when the consigner and consignee are the same entity, repeated claims of bona fide errors cannot be readily accepted. Thus, the invocation of Section 129 and imposition of a 100% penalty were found to be justified.

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