The Hon’ble High Court of Allahabad vide its order dated 02.02.2023 in the matter of M/s Varun Beverages Limited Vs. State of U.P. And 2 Others in Writ Tax No. – 958 of 2019, set aside the order imposing tax and equivalent penalty under Section 129(3) of the CGST Act, for entering the wrong vehicle number in the e-way bill.  It was found that a minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty under Section 129 and the order passed by the detaining authority as well as first appellate authority cannot be sustained.

The Petitioner filed the writ petition before the Hon’ble High Court assailing the penalty order dated 12.06.2018 passed by respondent no. 2 and the order dated 01.07.2019 passed by appellate authority, respondent no. 3.

Facts of the Case: –

• The Petitioner is a registered dealer under the Goods and Service Tax Act, 2017 and engaged in the business of manufacturing and sale of aerated water, fruit juice-based drinks etc.
• The dealer was making a stock transfer from its unit at Gautam Buddha Nagar, Greater NOIDA depot to a sale depot at Kuberpur, Agra. The goods were being transported through Truck No. HR-73/6755 which was accompanying delivery challan, e-way bill and bilty on 10.06.2018.
• That the mobile squad on 10.06.2018 intercepted the goods and detained the vehicle in question along with the goods on the ground that in the e-way bill the vehicle number has been mentioned as UP-13T/6755. Detention order was passed on 11.06.2018.
• Thereafter, a penalty order under Section 129(3) of the Act of 2017 was passed imposing a tax of Rs.1,86,834/- and penalty of the same amount, totalling Rs.3,73,668.
• Being aggrieved of the said order, the petitioner preferred an appeal under Section 107 before the Additional Commissioner, Grade-II (Appeal-III) Commercial Tax, Agra. The appeal was dismissed vide order impugned dated 01.07.2019.

Petitioner’s Submissions: –

• It was submitted on the behalf of the petitioner that it was a case of stock transfer by the dealer from its unit at Gautam Buddha Nagar to sale depot at Agra. The goods which were in transit were accompanied by necessary documents and the e-way bill. The only mistake on the part of the person in-charge who had downloaded the e-way bill was wrong entry of the Vehicle No. UP-13T in place of HR-73.
• The goods were being transported with all the necessary documents and there was no intention to evade payment of tax. To Support its contention, reliance was placed on the decision of Hon’ble Supreme Court in Assistant Commissioner (ST) and others vs. M/s. Satyam Shivam Papers Pvt. Ltd. and another, 2022 UPTC (110) 269, M/s. Gobind Tobacco Manufacturing Corporation and another vs. State of U.P. and others, 2022 UPTC (111) 1080, M/s. Ramdev Trading Company and another vs. State of U.P. and others, 2017 UPTC 1200 (Both Decisions of Division Bench of this Court).

On the other hand, it was submitted on the behalf of the respondents that the circular of the year 2018 issued by the Commissioner provides that in case of any mistake in entering details of the transporter in the e-way bill, one or two digits can be ignored by the taxing authorities, but where the entire digit as has been entered in the e-way bill is not matching with the vehicle in transit, the explanation given by the dealer cannot be accepted.  It was further contended that the registration number of vehicle through which the goods were in transit was HR-73/6755, while the number entered in the e-way bill was UP-13T/6755.

Held: –

• The Hon’ble Court after considering the submissions made and facts of the case, found that the sole controversy before the Court is as to whether the wrong mention of number of Vehicle No. HR- 73/6755 through which the goods were in transit and detained by the taxing authorities would be considered as a human error and will be covered under the circular No. 41/15/2018-GST dated 13.04.2018 and 49/23/2018-GST dated 21.06.2018, as the number mentioned in the e-way bill was UP-13T/6755 and the mistake is of only of HR-73 in place of U.P.-13T.
• It was found by the Hon’ble Court that it is not in dispute that goods were being transported by the dealer through stock transfer from its unit at Gautam Buddha Nagar to its sale depot at Agra. The bilty which is the document of the transporter mentions the vehicle number as HR-73/6755. Though, in E-way bill, it has been mentioned as UP-13T/6755. So, it is clear that mistake is as far as the registration of the vehicle in a particular State and in place of HR-73, UP-13T has been mentioned in the e-way bill, while number of the vehicle 6755 is same.
• It was found that it is an admitted fact that it is a case of stock transfer and there is no intention on the part of dealer to evade any tax, the minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty under Section 129. Therefore, the order passed by the detaining authority as well as by the appellate authority are not sustainable.
• Moreover, the Department has not placed before the Court any other material so as to bring on record that there was any intention on the part of the dealer to evade tax except the wrong mention of part of registration number of the vehicle in the e-way bill. Further, the vehicle through which the goods were transported and the bilty showed the correct registration number, while there was a minor discrepancy in Part – B of the e-way bill where the description of the vehicle is entered by the dealer.

The Hon’ble Court with the above findings, allowed the writ petition by setting aside the orders dated 12.06.2018 and 01.07.2019 and holding that both the orders are not sustainable in the eyes of law.