Mens rea is essential for imposing penalties under tax laws; technical faults without intent to evade tax should not attract penalties.

JUDGMENT

Shekhar B. Saraf, J.

Heard Sri. Suyash Agarwal, learned counsel appearing on behalf of the petitioner and Sri. Shiv Prakash Dubey, learned Standing Counsel appearing on behalf of the State.

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner is aggrieved by the order levying penalty dated October 25, 2018 passed by the respondent No.2/Assistant Commissioner, Commercial Tax, Mobile Squad, Unit-I, Ghaziabad under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as "the Act") and the order of the Appellate Authority dated January 27, 2020 passed by respondent No.1/Additional Commissioner Grade- 2 (Appeal), Judicial Division-I, Commercial Tax, Ghaziabad under Section 107 of the Act.

3. The factual matrix in this case is that the invoice and the E- Way Bill were accompanying the goods and the description of the goods matched with the invoice. Only Part B of the E-Way Bill was not filled up at the time of interception. However, Part B of the E-Way Bill was filled up by the petitioner immediately after the interception, that is, much before the order of detention was passed.

4. It is to be noted that in the present case, the goods were imported from China and IGST @ 28% was paid at the time of import. It is to be further noted that when IGST has already been paid to the custom authorities while the goods were being imported, no further tax is leviable under the Act.

5. In light of the same, learned counsel for the petitioner submitted that there was only technical fault with regard to non filling up of Part B of the E-Way Bill and no mens rea was present on the part of the petitioner for evasion of tax. He relied upon two judgments of this Court in M/s Hindustan Herbal Cosmetics v. State of U.P. and Others (Writ Tax No.1400 of 2019 decided on January 2, 2024) and M/s Falguni Steels v. State of U.P. and Others (Writ Tax No.146 of 2023 decided on January 25, 2024) wherein this Court held that mens rea to evade tax is essential for imposition of penalty.

6. In the present factual matrix, it is crystal clear that IGST had already been paid and there was no involvement whatsoever of any mens rea for evasion of tax. Furthermore, the only technical fault was with regard to non filling up of Part B of the E-Way Bill.

7. In light of the above, the impugned orders are not sustainable and the same are required to be set aside.

8. Accordingly, the orders dated October 25, 2018 and January 27, 2020 are quashed and set aside. The writ petition is allowed. Consequential relief to follow. The respondents are directed to return the security to the petitioner within four weeks from date.