# M/s Ashoka P.U. Foam (India) Pvt. Ltd v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 172
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-24
- **Case number:** Writ Tax No. 228 of 2020
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-ashoka-p-u-foam-india-pvt-ltd-v-state-of-u-p-ors-51311
- **Pages:** 3

## Headnote

Taxation Law - U.P. Goods and Services
Tax Act, 2017 - Section 129 - U.P. Goods
and Services Tax Rules, 2017 - Rule 138 -
Penalty
for
Technical
Error
-
Petitioner
challenged penalty order dated 13.09.2018 and
appellate order dated 03.10.2019 for nonupdated e-way bill due to vehicle breakdown
during Bharat Band - Held, mere technical error
in e-way bill, without intent to evade tax, does
not justify penalty - Mens rea essential for
penalty imposition under Section 129 - M/s
Modern Traders Vs St. of U.P., M/s Galaxy
Enterprises Vs St. of U.P., and Hindustan Herbal
Cosmetics Vs St. of U.P. followed - Appellate
authority's finding of violation despite no tax
evasion intent unsustainable - Impugned orders
quashed, refund of deposited amount ordered
within four weeks. (Para 5-8)

Writ petition allowed.

List of Cases Cited:

## Text

172 INDIAN LAW REPORTS ALLAHABAD SERIES
printing and packing within the local area,
by the applicant?"

3. It is to be noted that for the same
assessee on the same issue the Tribunal had
held in favour of the assessee for the
assessment year 2010-11. The matter was
carried to this High Court by way of
Sales/Trade Tax Revision No.728 of 2014
and by an order dated December 21, 2015
the issue was decided in favour of the
assessee and against the department.

4. This decision of the High Court
was accepted by the department and has not
been challenged by way of any appeal.
Hence, applying the doctrine of finality this
issue is no longer res-integra.

5. One may ofcourse keep in mind
that in taxation matters, the principles of
res-judicata do not apply squarely for one
assessment year to the other. However,
keeping in mind the doctrine of finality,
unless there is a marked change from one
assessment
year
to
the
other,
the
department cannot be allowed to take a
different stand. The above principle has
been upheld by the Supreme Court in a
catena of judgments including Bharat
Sanchar Nigam Ltd. v. Union of India
reported in [2006] 3 SCC 1, wherein the
Supreme Court has held as follows :-

"The courts will generally adopt
an earlier pronouncement of the law or a
conclusion of fact unless there is a new
ground urged or a material change in the
factual position. The reason why court have
held parties to the opinion expressed in a
decision in one assessment year to the same
opinion in a subsequent year is not because
of any principle of res judicata but because
of the theory of precedent or the
precedential
value
of
the
earlier
pronouncement. Where facts and law in a
subsequent assessment year are the same,
no authority whether qushi-judicial or
judicial can generally be permitted to take
a different view. This mandate is subject
only to the usual gateways of distinguishing
the earlier decision or where the earlier
decision in per-incuriam. However, these
are fetters only on a co-ordinate bench
which, failing the possibility of availing of
either of these gateways, may yet differ
with the view expressed and refer the
matter a Bench of superior strength or in
some cases to a Bench of superior
jurisdiction."

6. In the light of the above, it is clear
that as no new facts have emerged in the
present case, the questions of law have to
be decided in favour of the assessee.
Accordingly,
the
revision
petition
is
allowed. Consequential reliefs to follow.

7. Any amount that has been
deposited by the assessee in relation to the
above demand shall be returned to the
assessee within a period of six weeks from
date.
----------
(2024) 2 ILRA 172
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.01.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 228 of 2020

M/s Ashoka P.U. Foam (India) Pvt. Ltd.
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri
Rahul
Agarwal
2 All. M/s Ashoka P.U. Foam (India) Pvt. Ltd. Vs. State of U.P. & Ors.
173
Counsel for the Opposite Party:
C.S.C.

Taxation Law - U.P. Goods and Services
Tax Act, 2017 - Section 129 - U.P. Goods
and Services Tax Rules, 2017 - Rule 138 -
Penalty
for
Technical
Error
-
Petitioner
challenged penalty order dated 13.09.2018 and
appellate order dated 03.10.2019 for nonupdated e-way bill due to vehicle breakdown
during Bharat Band - Held, mere technical error
in e-way bill, without intent to evade tax, does
not justify penalty - Mens rea essential for
penalty imposition under Section 129 - M/s
Modern Traders Vs St. of U.P., M/s Galaxy
Enterprises Vs St. of U.P., and Hindustan Herbal
Cosmetics Vs St. of U.P. followed - Appellate
authority's finding of violation despite no tax
evasion intent unsustainable - Impugned orders
quashed, refund of deposited amount ordered
within four weeks. (Para 5-8)

Writ petition allowed.

List of Cases Cited:

1. M/s Modern Traders Vs St. of U.P.; Writ Tax
No. 763 of 2018, decided on 09.05.2018

2. M/s Galaxy Enterprises Vs St. of U.P.; Writ
Tax No. 1412 of 2022, decided on 06.11.2023

3. Hindustan Herbal Cosmetics Vs St. of U.P.;
Writ Tax No. 1400 of 2019, decided on
02.01.2024

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. Heard Mr. Rahul Agarwal, counsel
appearing behalf of the petitioner and Mr.
Ravi Shanker Pandey, Additional Chief
Standing Counsel for the respondents.

2. This is a writ petition under Article 226
of the Constitution of India wherein the
petitioner is aggrieved by the penalty order
dated September 13, 2018 passed by the
respondent No.4/Assistant Commissioner, State
Goods and Services Tax, Agra and the order
dated October 3, 2019 passed in appeal by the
respondent
No.3/Additional
Commissioner
Grade-2 (Appeal)-III, State Goods and Services
Tax, Agra.

3. Upon perusal of the impugned order
dated September 13, 2018, it is blatantly clear
that in spite of recording the submissions of the
petitioner, the appellate authority has not dealt
with the same and in fact in the reasoning
portion, has specified an incorrect submission
of the assessee/petitioner.

4. The case of the petitioner was that the
goods have been loaded on a particular vehicle,
which broke down and upon such breaking
down, the goods were loaded on another
vehicle. At that point of time, the goods were
seized. The petitioner had explained that the
date on which the breakdown had taken place,
there was Bharat Band and due to the same, the
driver of the vehicle could not update the e-way
bill. The factual position is that the goods were
accompanied by invoice and e-way bill
reflecting earlier vehicle number. Furthermore,
it is to be noted that the revised e-way bill was
produced before the authorities prior to the
passing of the seizure order.

5. The appellate authority, while passing
the order in appeal, has made categorical
finding that even if the documents are
accompanied with the goods but there is a
technical error, the same would amount to
violation of provisions of Section 129 of
the Uttar Pradesh Goods and Services Tax
Act, 2017 read with Rule 138 of the Uttar
Pradesh Goods and Service Tax Rules,
2017, even though there is no intention to
evade tax.

6. In a catena of judgments, this Court
has held that presence of mens rea for
evasion of tax is a sine qua non for
174 INDIAN LAW REPORTS ALLAHABAD SERIES
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].

7. The imposition of penalties within
the realm of tax laws should not be based
solely on insignificant technical errors
devoid of any financial consequences. The
foundational
principle
guiding
this
approach is the commitment to maintain a
tax system that is characterized by fairness
and justice, where the severity of penalties
corresponds to the gravity of the offense
committed. While penalties serve a pivotal
role in ensuring compliance with tax laws, legal
frameworks stress the importance of establishing
the actual intent to evade taxes as a prerequisite for
their just imposition. This emphasis underscores
the critical need to differentiate between
inadvertent technical errors and purposeful
attempts to circumvent tax obligations. Penalties,
according to this principle, should be reserved
exclusively for cases where concrete evidence
points to a deliberate and fraudulent act against the
tax system, rather than being applied to situations
involving unintentional mistakes. The legal
rationale supporting this principle recognizes that
the primary purpose of taxation statutes is not to
penalize inadvertent errors but rather to address
intentional acts of non-compliance. Consequently,
the burden of proof falls squarely on tax
authorities to demonstrate the genuine intent to
evade tax before penalizing taxpayers. This
safeguard is indispensable to shield individuals
and entities from punitive measures arising from
honest mistakes, administrative errors, or technical
discrepancies that lack any malicious intent. The
fundamental principle requiring an intent to evade
tax for the imposition of penalties is crucial for
preserving the fairness and integrity of taxation
systems. In order to uphold a balanced and
equitable approach to tax enforcement, it is
imperative to recognize and acknowledge the
distinction
between
technical
errors
and
intentional evasion.

8. In light of the above, I am of the view that
the orders impugned in this writ petition are not
sustainable in law wherein the authorities have
exceeded their jurisdiction and have not acted in
accordance with the provisions of the statutes.
Accordingly, the order September 13, 2018 and
October 3, 2019 are quashed and set-aside. The
amount deposited by the petitioner be
refunded within a period of four weeks
from date. Other consequential reliefs to
follow.

9. The writ petition is, accordingly,
allowed.
----------
(2024) 2 ILRA 174
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.01.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 276 of 2020

M/s Associated Switch Gears and Projects
Ltd., Greater Noida ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Rishi Raj Kapoor

Counsel for the Respondents:
C.S.C.

Taxation Law- U.P. Goods and Services
Tax Act, 2017 - Principles of Natural Justice -