The Allahabad High Court in the case of M/S GAYLORD PACKERS INDIA PVT. LTD. VERSUS STATE OF U.P. AND 3 OTHERS vide Writ Tax No. – 683 of 2020 dated 17.07.2025, reinforces that detention and penalty under Section 129 should be reserved for serious infractions involving evasion or fraud, not trivial clerical errors. The decision upholds the doctrine of proportionality, the importance of mens rea, and promotes a fair and reasoned approach in GST compliance enforcement. Clerical errors or minor discrepancies do not attract penal consequences under Section 129. The Authorities are expected to apply mind to the facts and distinguish between procedural lapse and fraudulent intent.

Facts of the Case: The petitioner was engaged in the manufacture and sale of polyester film (used as packaging material), dispatched a consignment from Ghaziabad to Delhi based on a valid order from M/s Rajni Enterprises. An invoice and an e-way bill were generated. However, during transit on 12.02.2019, the goods were intercepted and seized at Ghaziabad by GST officials.

The reason for seizure was a clerical error in the e-way bill: the invoice number was incorrectly entered as ‘4671’ instead of the correct number ‘4670’—a difference of just one digit. All other details were correct.

The petitioner challenged the seizure order dated 13.02.2019 and the penalty order dated 22.02.2020 passed under Section 129 of the CGST/SGST Act, alleging that the action was unjustified and based solely on a minor typographical error.

Issue: Whether a minor typographical error (in one digit of the invoice number) in the e-way bill is sufficient ground to initiate proceedings and levy penalty under Section 129 of the CGST Act. Whether the authorities erred in treating the error as evidence of intent to evade tax (mens rea).

Held that:

The Court noted that the difference in the invoice number was merely clerical—a one-digit mismatch with all other details correctly matching, and there was no intention to evade tax. Further, the Court placed reliance upon its prior decisions in M/s Nanhey Mal Munna Lal v. Addl. Commissioner, M/s Cavendish Industries Ltd. v. State of UP, M/s Hindustan Herbal Cosmetics v. State of U.P., wherein it was held that mens rea is essential for invoking Section 129, and minor errors without malice do not attract penalty.

Also, the Court referred to the CBIC Circular No. 64/38/2018-GST dated 14.09.2018, which clarifies that proceedings under Section 129 are not to be initiated for minor errors in one or two digits of document numbers in e-way bills.

The Court found that the penalty and seizure orders lacked jurisdiction and were unsustainable in law. Both were quashed. Any amount deposited by the petitioner towards penalty shall be refunded along with interest at 4% per annum, from the date of deposit till actual payment.

Relevant provisions

CBIC Circular No. 64/38/2018-GST dated 14.09.2018

• Clarifies that minor errors, such as one or two-digit mismatch in document numbers, should not trigger proceedings under Section 129.
• Emphasizes that intent to evade tax (mens rea) is a relevant consideration.

To read the complete judgment 2025 Taxo.online 1567