The Allahabad High Court held that in the absence of any other discrepancy, the incorrect address entered in four out of eight e-way bills is of the principal place of business of the petitioner, the same does not give rise to the presumption of intention to evade tax and the mere technical error committed by the petitioner cannot result in the imposition of such harsh penalty upon the petitioner.
Brief Facts:
The petitioner is engaged in the business of manufacturing and selling pressure cookers under the brand name Hawkins with the principal place of business at Kanpur and the factory at Jaunpur. The petitioner purchases/stock transfers various parts/raw materials for manufacturing of pressure cookers from Maharashtra to Uttar Pradesh. The goods were to be delivered to the factory in Jaunpur. In 4 out of 8 e-way bills, the delivery address was correctly recorded. However, in the remaining 4 e-way bills, the address of the principal place of business at Kanpur was mentioned instead of the factory at Jaunpur. The goods were intercepted and a detention memo was issued based on the discrepancies in the e-way bills.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner submitted that due to an inadvertent error/overlooking by the accountants of the suppliers who generated the E-Way bill, they failed to change the place of supply which is automatically displayed. Thus the E-Way bills have been generated containing the wrong place of supply of goods at Kanpur instead of Satharia, Jaunpur. The delivery of raw materials cannot be taken by the petitioner at Kanpur, since the raw materials are required for manufacturing of pressure cookers which is done only at its factory in Satharia, Jaunpur, and not at the principal place of business. Thus the mentioning of the wrong place of supply in the E-Way bill was merely a technical breach. He submitted that the same was a technical error only as there was no intention of the petitioner to hide the destination in the e-way bills. In fact, he submitted that all the invoices and the abilities that were accompanying the goods bear the correct address of the destination which is Jaunpur.
Contentions of the Respondent:
The learned counsel appearing on behalf of the respondent submitted that the error/mistake in this case was grave and raised a presumption of evasion of tax. He further the error/mistake in this case was grave in nature and raised a presumption of evasion of tax. Further reliance was placed on judicial pronouncements to argue that non-compliance with the provisions of the Uttar Pradesh Goods and Service Tax, Act, 2017 and Rule 138 of the Act, would result in the imposition of a penalty. He further supported the impugned orders.
Observations of the court:
The Court observed that admittedly wrong addresses were mentioned in 4 out of 8 e-way bills. However, since there were no discrepancies in the 8 invoices and bills, the Court observed that the argument of the petitioner regarding inadvertent error was not far-fetched. The Court observed that there was no intention to evade tax on the part of the petitioner.
Further, it was stated that here penalty is being imposed under Section 129 of the Act an intention to evade tax should be present. Now, such an intention to evade tax may be presumed by the department in cases where there is wholesale disregard of the Rules.
The court then held that presumption of intention to evade tax may be made in cases where goods are not accompanied by invoices or e-way bills as the same can be rebutted by the assesee. However, in the case where goods are accompanied by all documents and a technical/ clerical error has crept into one of the documents, such a presumption cannot be made. The Court held that in such cases it is on the department to indicate the intention to evade tax and further technical error in the e-way bill cannot lead to imposition of harsh penalty on the petitioner.
The decision of the Court:
The court allowed the petition and quashed the penalty order.
Case Title: M/S Hawkins Cookers Limited vs State of U.P and ors.
Coram: Hon’ble Mr. Justice Shekhar B. Saraf
Case No.: WRIT TAX No. - 739 of 2020
Advocate for the Petitioner: Mr. Shubham Agrawal
Advocate for the Respondent: C.S.C., Ravi Shanker Pandey
Read Judgment @LatestLaws.com:
Picture Source :
