Order Date – 02 January 2024

Parties: Hindustan Herbal Cosmetics Vs State of UP and 2 Others

Facts –

• The Petitioner, Hindustan Herbal Cosmetics, is was supplying cosmetics to another registered dealer and the transaction was duly covered by a tax invoice, a bilty and e-way bill, all dated May 23, 2018.
• When the vehicle was in transit, the same was intercepted on 23.5.2018 10.40 P.M. by the Goods and Service Tax authorities. The seizure order was passed on the ground that the vehicle number in Part-B of the e-way bill was incorrect as the e-way bill showed a wrong vehicle Number. A penalty was imposed on petitioner.

Issue –

• Whether penalty can be imposed when the e-way bill showed a wrong vehicle Number?

Order –

• The Single Bench of Hon’ble High Court observed that upon perusal of Supreme Court judgment in M/s. Satyam Shivam Papers, the principle that emerges is that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty.
• In the present case, instead of ‘5332’, ‘3552’ was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law.  
• The Writ petition is allowed.