Non Updation of E-Way Bill Part B without any intention to evade tax would not lead to imposition of penalty under GST: HC

Allahabad High Court in the matter of M/S Nokia Solutions And Networks India Pvt. Ltd. V/s State Of U.P. And 2 Others WRIT TAX No. – 1034 of 2019 held that non-filling up of Part ‘B’ of the E-Way Bill by itself without any intention to evade tax would not lead to imposition of penalty under Section 129(3) of the Act.

Facts of the case:

• Goods were being supplied after charging applicable GST.
• After preparing invoices, Petitioner generated e-way bills. However, since the vehicle number was not informed by the transporter, hence Part-B of e-way bills was not completed/filled up by the Petitioner while generating the e-way bills;
• Even though the transporter was instructed to start movement of vehicles, only after updating Part B of e-way Bills, yet due to some miscommunication between transporter and the driver, the driver started transportation, without updating Part-B of e-way bills;
• Vehicle was stopped by GST Department and upon interception, driver produced the papers available with him relating to the transaction in question
• Immediately, after receiving the news of interception, transporter informed the same to the Petitioner whereupon Petitioner generated e-way bills again by updating Part-B
• Even though, the deficiency, in Part B of e-way bills was cured by Petitioner by updating by Part B of e-way bills and the same was also produced, yet Department proceeded to pass detention order on the sole ground that at the time of interception, Part B of e-way bills was not updated. On the same date, notice was issued under Section 20 of IGST Act directing the driver to appear and explain as to why not tax and penalty be demanded for release of goods and vehicle;
• Upon receipt of the aforesaid notice, Petitioner submitted a reply stating the circumstances in which Part B of e-way bills was not updated initially and that the same was updated prior to passing of the detention order;
• Oder rejecting the reply furnished by Petitioner was passed confirming demand of tax and penalty, on the sole ground that Part B of e-way bills were not filled and thus the same was not a valid e-way bills for transportation of goods;
• Aggrieved with the order, Petitioner filed a statutory appeal which was dismissed by the higher authorities confirming Demand and Detention order.

Observations of the Court:

• In the present case, apart from the factual aspect that the Part B of E-Way Bills was not filled up, there is no material on record to show that the petitioner had any mens rea to evade tax.
• It is to be noted that the invoice, that was being carried, matched with the goods in the truck and the goods were not in variance with the invoice.
• Furthermore, the only reason upon which the presumption has been made by the authority concerned is that the tax may have been evaded as the distance between Delhi and Meerut is about 75 kilometers which would allow the petitioner to do multiple trips and evade tax.

Order:

6. ….In my view, no other material has been brought on record by the authorities to indicate that there was any mens rea on the part of the petitioner to evade Furthermore, it is to be noted that the other columns of the E-Way Bills such as description of the goods, quantity of the goods and value etc. were found to be the same as in the tax invoice accompanying the goods. Furthermore, there was no mismatch between the goods that was being carried out in the vehicle and the invoice.

7. In light of the above, the reason of presumption of evasion of tax is without any basis in law, and accordingly, the order of detention and subsequent appellate order are illegal and required to be set aside.

8. It is to be noted that it is upon the authorities to pass orders under Section 129 of the Act on the basis of some investigation that may indicate an intention to evade The same cannot be solely on surmises and conjectures.