Varun Beverages Limited vs State of U. P.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(All) 2376

IN THE HIGH COURT OF ALLAHABAD
ROHIT RANJAN AGARWAL, J.
M/S Varun Beverages Limited - Petitioner
Versus
State of U.P. and Others - Respondents
WRIT TAX NO. - 958 OF 2019.
Decided On : 02-02-2023

Advocates appeared:
For the Petitioner: Shubham Agrawal.
For the Respondent: C.S.C.

Headnote:(A) Goods and Service Tax Act, 2017 - Section 129(3) - Penalty imposed for incorrect vehicle registration - The Court found that the error was minor, not indicative of intent to evade tax, and that necessary documentation accompanied the stock transfer - Circulars allow for minor discrepancies in vehicle registration to be overlooked. (Paras 4, 7, 9)

(B) Writ Jurisdiction - The court determined the legality of penalty orders and emphasized that minor errors should not attract penalties in absence of fraudulent intent. (Para 9)

Facts of the case:
The petitioner, a registered dealer under the Goods and Service Tax Act, challenged a penalty imposed for incorrect vehicle registration during a stock transfer, asserting no intent to evade tax.

Findings of Court:
The penalty orders were unsustainable and were set aside.

Issues: The central issue was whether the error in vehicle registration warranted penalty given the dealer’s intent and compliance with regulations.

Ratio Decidendi: The court ruled that minor discrepancies in vehicle registration documented appropriately do not necessitate penalty under the Act, emphasizing that intent to evade is crucial for imposing penalties.

Result: Writ petition allowed and penalty orders set aside.

Table of Content
1. background about the penalty order and stock transfer. (Para 2 , 3)
2. arguments by both parties regarding responsibility for the error. (Para 4 , 5)
3. court's assessment of the vehicle registration error. (Para 6 , 7 , 8)
4. minor registration error does not merit penalty. (Para 9)
5. judgment annulled; writ petition allowed. (Para 10 , 11)

JUDGMENT

Rohit Ranjan Agarwal, J.

Heard Sri Shubham Agrwal, learned counsel for the petitioner and Sri R.S. Pandey, learned Standing Counsel for the State.

2. This writ petition has been filed 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.

3. The petitioner before this Court is a registered dealer under the Goods and Service Tax Act, 2017 (hereinafter called as "Act of 2017"). It is 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 shifted through Truck No. HR-73/6755 which was accompanying delivery challan, e-way bill and bilty on 10.06.2018. The mobile squad on 10.06.2018 intercepted the goods and detained the vehicle in question along with the goods on the premise 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, totaling Rs.3,73,668. Against the said order, an appeal under Section 107 of the Act was preferred by the dealer before the Additional Commissioner, Grade-II (Appeal-III) Commercial Tax, Agra. The appeal was dismissed vide order impugned dated 01.07.2019. Hence, the present writ petition.

4. Sri Shubham Agrawal, learned counsel for the petitioner submitted 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. Except this fact the goods were being transported along with all the necessary documents. According to learned counsel, there was no intention to evade the tax on behalf of dealer and reliance has been placed upon decision of the Apex Court in case of Assistant Commissioner (ST) and others v. M/s. Satyam Shivam Papers Pvt. Ltd. and another, 2022 UPTC (110) 269. The said judgment has been relied upon by Division Bench of this Court in case of M/s. Gobind Tobacco Manufacturing Corporation and another v. State of U.P. and others, 2022 UPTC (111) 1080. Reliance has also been placed upon another Division Bench judgment of this Court in case of M/s. Ramdev Trading Company and another v. State of U.P. and others, 2017 UPTC 1200.

5. Per contra, learned Standing Counsel submitted 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 digit 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 afforded by the dealer cannot be accepted. He further contends 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.

6. I have heard respective counsel for the parties and perused the material on record.

7. The sole controversy engaging the attention of 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

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