The Allahabad High Court in the case of M/S BANS STEEL THROUGH ITS PROPRIETOR ALPANA JAIN VERSUS STATE OF U.P. AND 2 OTHERS vide Writ Tax No. – 577 of 2022 dated 09.08.2024, emphasized that once the E-way bill was produced before the seizure order was passed and no discrepancy was found, there was no valid reason for penalizing the petitioner. The judgment reflects the principle that corrective actions taken before final orders should be considered and that procedural lapses corrected in time do not justify punitive measures. 

This judgment underscores the importance of considering whether discrepancies in documentation can be resolved before passing punitive orders. The court emphasized that mere technical lapses should not automatically lead to penalties if the taxpayer rectifies the issue in a timely manner, thereby upholding the principles of fairness and justice in tax enforcement.

Facts of the Case:  The petitioner purchased good with appropriate tax invoices and E-way bills generated for the transportation. The petitioner sold the goods to M/s Dinesh Chandra Gupta and Sons and M/s Jain S.S. Steel on 12.07.2019, generating invoice nos. 21 and 22, respectively. While an E-way bill was generated for invoice no. 21, due to a technical error, the E-way bill for invoice no. 22 was delayed and only generated on 14.07.2019.

The goods were intercepted by respondent no. 3 on 13.07.2019, and since the E-way bill for invoice no. 22 was not available at the time, the goods were detained. Also, passed an order imposing a tax liability and penalty. 

It was argued that he E-way bill for invoice no. 22 was submitted before the seizure order was passed, which should have resolved any discrepancies. The petitioner emphasized that there was no intent to evade tax, and the authorities acted unlawfully in detaining the goods and imposing penalties.

The respondents contended that the absence of an E-way bill at the time of interception justified the detention and penalties, presuming an intention to evade tax. They relied on precedents where goods without proper documentation were seized and penalties were upheld.

Held that:  The court observed that while the E-way bill for invoice no. 22 was not available at the time of interception, it was produced before the seizure order was passed, and no discrepancies were noted by the authorities regarding the E-way bill once submitted. The court distinguished this case from the precedents cited by the respondents, noting that in those cases, no documents were provided at all, whereas, in the present case, the missing E-way bill was promptly rectified. The court criticized the authorities for not conducting further investigations, such as surveying the petitioner’s business premises, to verify the transaction's legitimacy, especially after the E-way bill was produced.

The court quashed the impugned orders holding that the petitioner had complied with the law by producing the required E-way bill before the seizure order was issued. The writ petition was allowed, directed the refund of any amounts deposited by the petitioner in compliance with the quashed orders. 

To read the complete judgment 2024 Taxo.online 1764