The Hon’ble High Court of Kerala vide its order dated 6^th April 2022 in the matter of Greenlights Power Solutions Vs. State Tax Officer, Commissioner of Commercial Taxes in WP(C) NO. 7716 OF 2021 held that the error noticed in the instant case is insignificant and proceeding under Section 129 of the Act for such minor mistakes is not maintainable.

The Petitioner in the present case through an amendment has challenged the final order under Section 129(3) issued in Form MOV-09, imposing a tax of ₹ 27,540/- and an equivalent amount as penalty.

Facts: –

• The petitioner having a valid registration, is carrying on the business in electrical contract work and in connection to work of hospital at Assam, transported some goods through a vehicle after paying required tax.
• The goods were intercepted and detained by the respondent’s noticing discrepancy in the E-way bill regarding the date of invoice which was mentioned as 03.02.2021 instead of 02.03.2021.
• That during the pendency of the writ petition, the respondents issued an order in GST MOV – 09 under Section 129 (3) of the Act, imposing tax of Rs, 27,540/- and equivalent penalty for a mistake of date format in the E-way Bill.

Petitioner’s Stand: –

• It was submitted on behalf of the petitioner that the error in invoice date occurred due to default of computer system, instead of ‘dd/mm/yyyy’ it generated the invoice in the format of ‘mm/dd/yyyy’ due to which the date on the invoice is reflecting as 03-02-2021 in place of 02-03-2021.
• That as the goods were required urgently, the petitioner was compelled to get the release of the goods on furnishing bank guarantee and unless it is released, the petitioner would be put to great prejudice.
• The petitioner relying on Circular dated 14-09-2018 submitted that the detention of goods and the demand for furnishing security for the tax and penalty imposed was illegal as the mistake was due to the default format i.e.,’ mm/dd/yyyy’, of the computer system which generated the bill in that way instead of the Indian format i.e.dd/mm/yyyy, and the petitioner should not be made liable to bear huge liabilities for such insignificant mistakes.

On the other hand, placing reliance on the decision of Assistant Commissioner of State Tax and Others v. Commercial Steel Limited [(2021) SCC Online SC 884], it was submitted on behalf of the respondents that the petitioner has an efficacious remedy of an appeal under the statute and that there was no reason to entertain this writ petition. Further, the mistake could have been for the purpose of evasion of tax.

Held: –

• The Hon’ble after considering the submissions from the both sides and taking reference of the Circular 64/38/2018 dated 14-09-2018 issued by Central Board of Indirect Taxes, wherein it was clarified in the Para 5 that proceedings under Section 129 may not be initiated in the following situations: –
  1. Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
  2. Error in the pin code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
  3. Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
  4. Error in one or two digits of the document number mentioned in the e-way bill;
  5. Error in 4- or 6-digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
  6. Error in one or two digits/characters of the vehicle number.

6. In case of the above situations, penalty to the tune of ₹ 500/- each under Section 125 of the CGST Act and the respective State GST Act should be imposed (₹ 1,000/- under the IGST Act) in FORM GST DRC-07 for every consignment. A record of all such consignments where proceedings under Section 129 of the CGST Act have not been invoked in view of the situations listed in paragraph 5 above shall be sent by the proper officer to his controlling officer on a weekly basis.”

 It is observed that the purpose of issuance of circular is to mitigate the hardships caused to taxpayers for minor discrepancies.  The circular is statutory in nature and binding on the tax officers and the minor discrepancies cannot be penalized contrary to procedure mentioned in the Circular.

• That from the analysis of six instances in the circular shows that it covers the discrepancies which has no effect on the tax liability and are caused on account of bonafide mistakes like typographical errors, the issue in the present case can be brought under clause (d) of para 5.
• That except date which has been mentioned as 03.02.2021 instead of 02.03.2021, all other details in all the relevant documents are correct and there is no discrepancy. Thus, the error noticed is insignificant and not of any consequence for invoking the power conferred under section 129 of the Act to impose tax and penalty.
• Further it was noticed by the Hon’ble High Court that its view is supported by the Madras High Court Decision in R.K.Motors v. State Tax Officer [(2019) 72 GST 501 (Madras), wherein the relief was granted to the taxpayer applying the aforesaid circular.
• Lastly, the Hon’ble High Court held that only a minor penalty, as prescribed in the circular, should be imposed in the present case and the imposition of tax and penalty by issuing the order in GST MOV-09 is perverse and illegal.

The Hon’ble High Court with the above findings quashed the impugned order issued in GST MOV-09 and directed to reconsider the same in view of the circular and the observations of the Court.  Further, the respondents were directed to pass fresh orders after granting opportunity of personal hearing to the petitioner.