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IN THE HIGH COURT OF MADHYA PRADESH
Mohammad Rafiq, Vijay Kumar Shukla, JJ.
Robbins Tunnelling and Trenchless Technology (India) Pvt. Ltd. – Appellant
Versus
State of M.P. and Ors. – Respondents
W.P. No. 12913 of 2020
Decided On : 04-02-2021
GST Act - Tax Evasion - Section 129, 126 - Summary of Acts and Sections: The court discussed the provisions of section 129 and 126 of the GST Act, emphasizing the requirement of carrying specified documents during the movement of goods and the imposition of penalty for minor breaches of tax regulations or procedural requirements. The court highlighted the circular issued by the Ministry of Finance, dated September 14, 2018, which clarified the initiation of proceedings under section 129 for mistakes in e-way bills and the consideration of minor penalties for clerical errors.
Fact of the Case:
The petitioner, a registered taxpayer under the GST Act, imported goods and erroneously entered the clearing agent's name as the consignee in the e-way bill. This led to the detention of the goods and the imposition of tax and penalty by the State Tax Officer.
Finding of the Court:
The court found that the mistake in the e-way bill was a procedural error without fraudulent intent or gross negligence, and the imposition of tax and penalty was unjustified. The court quashed the impugned orders and directed the respondents to consider imposing a minor penalty as per the circular issued by the Ministry of Finance.
Issues: The issues involved the erroneous entry in the e-way bill, the imposition of tax and penalty, and the applicability of minor penalties for clerical mistakes.
Ratio Decidendi: The court held that the mistake in the e-way bill was a procedural error and directed the respondents to consider imposing a minor penalty as per the circular issued by the Ministry of Finance.
Final Decision: The writ petition was allowed, and the impugned orders confirming the tax and penalty were quashed. The respondents were directed to consider imposing a minor penalty as per the circular issued by the Ministry of Finance.
ORDER :
Vijay Kumar Shukla, J.
1. Hearing convened through video conferencing mode.
The present petition has been filed under article 226/227 of the Constitution of India, challenging the order dated September 28, 2019, whereby the appellate authority, respondent No. 3 herein, has confirmed the imposition of tax to the extent of Rs. 11,12,134 and penalty of Rs. 11,12,134 against the petitioner.
2. The facts of the case, adumbrated in a nutshell, are that the petitioner is a registered taxpayer under the Goods and Services Tax Act (the GST Act) and it has imported boring machine cutter parts from its parent company from the United States of America (USA). Its clearing agent while shipping the goods from Customs Station, Mumbai to the registered office of the petitioner, situated in district Katni (MP), generated e-way bill in which by mistake erroneously entered its own name in the column of consignee. During the movement of goods the State Tax Officer of Anti Evasion Bureau, detained the vehicle and levied tax and penalty against the petitioner. Being aggrieved by the said order an appeal was preferred before the Joint Commissioner, S.G.S.T. (Appeals), Bhopal and the concerned officer affirmed the order of tax and penalty levied by the State Tax Officer and rejected the appeal.
3. The petitioner is a company and a registered dealer bearing GST Identification No. 23AADCR1345K1ZJ, providing services of tunnel boring and related activities therein. Since the Bank Canal Project of Narmada Valley Development Authority is going on, the petitioner is doing excavation work by tunnel boring machine and for the purpose of procurement, it has imported tunnel boring machine cutter parts, etc., from the Robbins Company (a parent company from the U.S.A.). After placement of purchase order, the Robbins Company, situated at 5866, South 194 Street Kent, WA98032 USA, has raised a commercial invoice in the name of the petitioner--Robbins Tunnelling & Trenchless Technology (India) Pvt. Ltd., Shub City, House No. C03, near Mansarovar Colony, Amirganj Road, Madhav Nagar, Katni 483 501 (M.P.), Invoice No. LSN0009039, dated September 13, 2018, for supply of disc, cutter ring and retainer, etc.
4. The petitioner has entered into an agreement with Titan Sea & Air Services Pvt. Ltd. and appointed the said company as its clearing and forwarding agent. At the time of import the bill of entry, bearing No. 8870378, dated November 15, 2018 for home consumption of the above-mentioned purchase was made. Subsequently, the customs duty assessed with IGST to the tune of Rs. 11,12,134 was paid as applicable on this import. The clearing and forwarding agent, M/s. Titan Sea & Air Services Pvt. Ltd., cleared the goods and prepared the documents for movement of goods from NHVA SHEVA, Mumbai Port to the petitioner's registered office, situated at C-3 Madhav Nagar, Katni. (M.P.) and raised tax invoice, bearing number SIC/1136/18-19, dated November 30, 2018 for the services provided to the petitioner.
5. The clearing and forwarding agent, Titan Sea & Air Services Pvt. Ltd., in compliance of section 68 of the Central Goods and Services Tax Act, 2017 (for short, "the GST Act") read with rule 138A of the Goods and Services Tax Rules, 2017 generated an e-way bill by logging into its own login ID for movement of the goods from Mumbai to Katni on November 28, 2018 at 06:03 hrs, e-way bill No. 231061028418. The clearing and forwarding agent filed all the related details of the transaction as required in the e-way bill, but by mistake generated the e-way bill on its own name, GST No. 27 AACT2359N1ZY as recipient of the goods, instead of the petitioner. The said goods was transported from Mumbai to Katni by the vehicle bearing registration No. MP-04-GA7780 along with all related documents. The vehicle was detained by the Sales Tax Officer, Anti Evasion, Bhopal on December 5, 2018 due to wrong shipping address in the e-way bill.
6. The petitioner submitted a reply on December 12, 2018 bef
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.
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 ....
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
The court considered the mistake in generating the E-way bill as a clerical error and invoked the principle of parity to quash the orders imposing additional tax and penalty.
Technical errors in e-way bills do not justify seizure or penalty if no discrepancies in goods are found, reinforcing the purpose of tracking goods movement under GST.
The imposition of penalties under tax laws requires clear evidence of intent to evade tax, and procedural fairness must be upheld in enforcement actions.
The main legal point established in the judgment is the requirement for generating e-way bills before the commencement of transportation of goods, the burden of proof on the taxpayer to establish lac....
Intention to evade tax is a prerequisite for imposing penalties under GST Act; mere technical issues should not warrant such penalties.
The main legal point established in the judgment is the requirement for proportionate punishment under the GST Act, emphasizing the lack of evidence of tax evasion, fraudulent intent, or negligence.
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