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IN THE HIGH COURT OF ALLAHABAD
SHEKHAR B. SARAF, J.
M/S Ridhi Sidhi Granite and Tiles - Petitioner
Versus
State of UP and 2 ors. - Respondents
WRIT TAX NO. 298 OF 2024.
Decided On : 01-03-2024
JUDGMENT
Shekhar B. Saraf, J.
Heard Sri. Rishi Raj Kapoor, learned counsel for the petitioner and the learned Additional Chief 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 dated September 23, 2023 passed by the Additional Commissioner, Grade-2 (Appeal)-I, State Goods and Services Tax, NOIDA dismissing the appeal filed by the petitioner and the order in original dated April 10, 2021.
3. Upon perusal of the record, it appears that apart from an error with regard to the address of the consignee in the E- Way Bill, there were no other issues with the said consignment. The invoice contained the address, the goods matched the description in the invoice and all other materials were intact. The imposition of tax is only on the basis of a technical error with regard to address of the consignee that was wrongly written in the E-Way Bill. The authorities have not been able to indicate any mens rea on the part of the petitioner for evasion of tax.
4. In a catena of judgments, this Court has held that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty and mere technical error would not lead to imposition of penalty [see M/s Modern Traders v. State of U.P. and others (Writ Tax No.763 of 2018, decided on 9.5.2018), M/s Galaxy Enterprises v. State of U.P. and others (Writ Tax No.1412 of 2022, decided on 6.11.2023 and Hindustan Herbal Cosmetics v. State of U.P. and others (Writ Tax No.1400 of 2019, decided on 2.1.2024].
5. In light of the above, the orders dated September 23, 2023 and April 10, 2021 are quashed and set aside. The amount deposited by the petitioner be refunded to it within a period of one month from date. Other consequential reliefs to follow.
6. The writ petition is, accordingly, allowed.
The imposition of tax penalties requires proof of mens rea; mere technical errors do not justify penalties.
A technical error in tax documentation does not justify penalty without evidence of intent to evade tax.
Mens rea is essential for imposing penalties under tax laws; technical faults without intent to evade tax should not attract penalties.
Imposition of penalty for minor breaches of tax regulations or procedural requirements under the GST Act should consider the nature of the mistake and the circular issued by the Ministry of Finance.
A technical error in documentation without intent to evade tax does not justify penalty under the Uttar Pradesh Goods and Service Tax Act.
Penalties should be reserved for cases where there is a demonstrated actual intent to evade tax, and technical errors without potential financial implications should not be grounds for imposition of ....
A penalty under Section 129(3) of the Act requires proof of mens rea for tax evasion, which was absent in this case, leading to the quashing of the penalty orders.
Technical violations without intent to evade tax do not justify penalties under the Uttar Pradesh Goods and Services Tax Act.
The absence of invoices and e-way bills creates a presumption of tax evasion under the Uttar Pradesh Goods and Services Tax Act, which must be rebutted by the petitioner.
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