Penalties under tax law cannot be imposed without clear evidence of intentional wrongdoing, especially amid rapid legislative changes causing confusion.

JUDGMENT

Shekhar B. Saraf, J.

Heard Sri. M.M. Rai, learned counsel for the petitioner and Sri. Ravi Shanker Pandey, learned Additional Chief Standing Counsel for the respondents.

2. This is a writ petition under Article 226 of the Constitution of India wherein the petitioner has assailed the order dated December 23, 2018 passed by the respondent No.4 in appeal. The penalty order under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 (hereinafter referred to as the Act) was passed on January 10, 2018.

3. Mr. Rai, learned counsel appearing on behalf of the petitioner submits that during the relevant period there were successive changes in the notification and due to the said fact, the Division Bench of this Court in Godrej Boyce Manufacturing Co. Ltd. v. State of U.P. and others reported in 2018 NTN (68) 53 held as under:

"50. It appears that legislative changes were made in such a quick succession that field authorities could not track themselves with such changes and, hence, adhered to compliance of provisions which stood already substituted by new provisions and earlier ones had become otiose. Insistence upon petitioners, at the time of issue of seizure memos and show-cause notices to have downloaded e-way-bill 01 and/or 02 and its non compliance by referring to Government's notification dated July 21, 2017 read with Commissioner's circulars dated July 22, 2017 and August 9, 2017 and also rule 138 as substituted vide Government notification dated September 20, 2017, though it was never imposed and made operative, was/is clearly erroneous and illegal. Notification dated January 31, 2018 whereby rule 138 was completely changed by substitution and made effective from February 1, 2018, it appears, escaped attention of authorities concerned, though it is this provision which had to be complied by petitioners. Unfortunately, authorities concerned have completely failed to observe the same. It appears that for the field authorities there was a gross chaos on account of quick changes in relevant provisions, hence, authorities concerned could not appreciate, what provision is supposed to be followed by concerned person and what is actual default, if any, which has been committed by such person. The petitioners (except Writ Petition No. 87 of 2018) in the present cases, when goods in transit were intercepted and impugned orders were issued, met an unauthorised act and suffered illegal order.

51. To complete the story, we may observe that rule 138 again stood substituted by notification dated March 26, 2018 which has come into force on April 1, 2018 but here also sub-rule (7) has not been made effective.

52. Counsel for the petitioners contended that notification dated September 20, 2017 having been rescinded subsequently will not result in revival of earlier provision but the submission, in our view, does not arise at all in view of discussions made above, showing that rule 138 as substituted by U.P. GST (Fourth Amendment) Rules, 2017 (Notification dated September 20, 2017), as a matter of fact, never became operative. The first amendment by substitution of rule 138 is by way of the U. P. GST (Thirteenth Amendment) Rules, 2018 vide notification dated January 31, 2018 which came into force on February 1, 2018 and it continued up to March 31, 2018. Thereafter, it stands substituted by another rule 138 vide U. P. GST (Fourteenth Amendment) Rules, 2018, notification dated March 26, 2018, made effective from April 1, 2018. Probably, the above pace of change derailed respondent authorities also in their understanding as to which provision has to be followed and implemented and what has to be observed/applied/ obeyed by petitioners and their transporters. That is how impugned orders have been passed under a clear misconception of non-downloading of e- way bill 01 or 02, as the case may be, though under rule 138, which had come into force on February 1, 2018, the form(s) required to be downloaded by dealers or transporters ar