# M/s DECO PLYWOOD INDUS v. State of U.P. & Ors

- **Citation:** (2024) 3 ILRA 1811
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-03-05
- **Case number:** Writ Tax No. 1136 of 2022
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-deco-plywood-indus-v-state-of-u-p-ors-51624
- **Pages:** 4

## Headnote

The Goods and Services Tax (GST) Act,
2017- Section 129 - duly registered dealer -
supplying plywood - transaction duly covered by
a tax invoice, a bilty and e-way bill - goods in
transit intercepted - seizure order passed on the
ground that the document/invoice number has
wrongly been mentioned in the e-way bill - no
other infraction - no allegation of any attempt
for evasion of tax - e-way bill, bilty and tax
invoice were matching - consignee was also a
registered
dealer
-
typing
of
the
document/invoice number - difference of four
digits - typographical error - law is not to
remain in a vacuum and has to be applied
equitably - presence of mens rea for evasion of
tax is a sine qua non for imposition of penalty -
imposition of penalty under Section 129 of the
Act is without jurisdiction and illegal in law -
impugned orders quashed and set-aside .

Writ petition allowed. (E-9)
1812 INDIAN LAW REPORTS ALLAHABAD SERIES
Cases Cited:

## Text

3 All. M/s DECO PLYWOOD INDUS. Vs. State of U.P. & Ors.
1811
even invoice and bility were accompanying
the goods at the time of interception. He,
accordingly, submits that the burden of
proof with regard to intention to evade tax
shifts from the Department to the assessee.

6. In the present case, the facts are
undisputed that neither invoice nor E-Way
Bill were accompanying the goods. Such a
contravention to the Rules cannot be
treated to be a mere technical or
typographical mistake, and accordingly, in
such cases, the burden of proof for
establishing that there was no mens rea for
evasion of taxes shifts to the assessee.

7. This Court in umpteen cases where
penalties
were
being
imposed
under
Section 129 of the Act though held that an
intention to evade tax should be present,
however, in the event the goods are not
accompanied by the invoice or the e-way
bill, a presumption may be raised that there
is an intention to evade tax. Such a
presumption of evasion of tax then
becomes rebuttable by the materials to be
provided by the owner/transporter of the
goods.

8. In the present case, one comes to an
inexorable conclusion that the petitioner
has not been able to rebut the presumption
of evasion of taxes, as he has not been able
to explain the absence of invoice and the EWay Bill. Production of these documents
subsequent to the interception cannot
absolve the petitioner from the liability of
penalty as the very purpose of imposing
penalty is to act as a deterrent to persons
who intend to avoid paying taxes owed to
the Government. It is clear that if the goods
had not been intercepted, the Government
would have been out of its pocket with
respect to the GST payable on the said
goods.

9. In light of the above findings, no
interference is required with regard to the
impugned orders. The writ petition is,
accordingly, dismissed.
----------
(2024) 3 ILRA 1811
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.03.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1136 of 2022

M/s DECO PLYWOOD INDUS. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agrawal

Counsel for the Respondent:
C.S.C.

The Goods and Services Tax (GST) Act,
2017- Section 129 - duly registered dealer -
supplying plywood - transaction duly covered by
a tax invoice, a bilty and e-way bill - goods in
transit intercepted - seizure order passed on the
ground that the document/invoice number has
wrongly been mentioned in the e-way bill - no
other infraction - no allegation of any attempt
for evasion of tax - e-way bill, bilty and tax
invoice were matching - consignee was also a
registered
dealer
-
typing
of
the
document/invoice number - difference of four
digits - typographical error - law is not to
remain in a vacuum and has to be applied
equitably - presence of mens rea for evasion of
tax is a sine qua non for imposition of penalty -
imposition of penalty under Section 129 of the
Act is without jurisdiction and illegal in law -
impugned orders quashed and set-aside .

Writ petition allowed. (E-9)
1812 INDIAN LAW REPORTS ALLAHABAD SERIES
Cases Cited:

1. M/s. Varun Beverages Limited v. State of U.P.
and 2 others, 2023 U.P.T.C. (113) 331.

2. Assistant Commissioner (ST) and others v.
M/s. Satyam Shivam Papers Pvt. Ltd. and
another, 2022 U.P.T.C. (110) 269 (SC).

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

1. This is an application under Article
226 of the Constitution of India wherein the
petitioner assails the order passed by the
Additional
Commissioner
Grade-2
(Appeal),
Commercial
Tax,
Agra/respondent No.3 dated June 17, 2022
and the order of the imposition of the
penalty dated February 1, 2021 passed by
the Commercial Tax Officer-2 (Mobile
Squad), Range-IV, Agra/respondent No.2.

2. The case of the petitioner is that the
petitioner is a duly registered dealer under
the Goods and Service Tax Act, 2017
(hereinafter referred to as ?the Act?) and is
a seller of plywood and allies products. The
petitioner was supplying plywood to
another registered dealer, namely, M/s
Mahalaxmi Associates, Mumbai and the
transaction was duly covered by a tax
invoice, a bilty and e-way bill, all dated
January 27, 2021.

3. It is a contention of the petitioner
that the consignment of goods was sent by
the petitioner in Vehicle No.HR 58B 9542.
DL1 AA 5332. When the vehicle was in
transit, the same was intercepted on
30.1.2021 by the Goods and Service Tax
authorities. The seizure order was passed
on the ground that the document/invoice
number has wrongly been mentioned in the
e-way bill as the e-way bill showed the
document/invoice No.2224 instead of 0401.
Apart from the above factual position, it is
clear that there was no other infraction on
the part of the petitioner. Furthermore, the
authorities have imposed penalty only on
the ground that the document number was
not mentioned correctly. There is no
allegation of any attempt by the petitioner
for evasion of tax as the e-way bill, bilty
and the tax invoice were matching and the
consignee was also a registered dealer.

4. Counsel on behalf of the petitioner
has submitted that number 0401 was typed
incorrectly as 2224, which is bilty number.
He has submitted that this is so obviously a
typographical error. He further relies upon
a coordinate Bench judgment of this Court
in M/s. Varun Beverages Limited v. State of
U.P. and 2 others reported in 2023 U.P.T.C.
(113) 331 and also upon the judgment of
the
Supreme
Court
in
Assistant
Commissioner (ST) and others v. M/s.
Satyam Shivam Papers Pvt. Ltd. And
another reported in 2022 U.P.T.C. (110)
269 (SC).

5. Per contra, Mr. Ravi Shanker
Pandey, learned Additional Chief Standing
Counsel has submitted that the Department
via a circular has allowed non imposition of
penalty in cases where there are mistake of
two digits in the vehicle number and no
further. He has further submitted that the
judgment in M/s. Varun Beverages Limited
(supra) would not apply as the same was a
case of stock transfer and there was no
question of any tax liability in that case. He
has also attempted to distinguish the
Supreme Court judgment on the ground
that it was a case wherein the e-way bill
had expired just before the vehicle was
detained and seized.
3 All. M/s DECO PLYWOOD INDUS. Vs. State of U.P. & Ors.
1813

Analysis and Conclusion

6. In the present case, one finds that
there is definitely an error with regard to
typing of the document/invoice number and
there is a difference of four digits instead of
the permitted two digits (as per the
government circular) as submitted by the
learned Additional Chief Standing Counsel.
However, law is not to remain in a vacuum
and has to be applied equitably in
appropriate cases. The judgment in M/s.
Varun Beverages Limited (supra) may be
referred to for this purpose. The relevant
paragraphs of the said judgment are
delineated below:-

"7.
The
sole
controversy
engaging the attention of the Court is as to
whether the wrong mention of number of
Vehicle No. HR-73/6755 through which the
goods were in transit and detained by the
taxing authorities would be considered as a
human error and will be covered under the
circular
No.
41/15/2018-GST
dated
13.04.2018 and 49/23/2018-GST dated
21.06.2018, as the number mentioned in the
e-way bill was UP-13T/6755 and the
mistake is of only of HR-73 in place of
U.P.-13T.

8. It is not in dispute that goods
were being transported by the dealer
through stock transfer from its unit at
Gautam Buddha Nagar to its sale depot at
Agra. The bilty which is the document of
the transporter mentions the vehicle
number as HR-73/6755. From perusal of
the e-way bill which has been brought on
record, it is clear that the vehicle number
has been mentioned as UP-13T/6755. It is
apparently clear that mistake is as far as
the registration of the vehicle in a
particular State and in place of HR-73,
UP-13T has been mentioned in the e-way
bill, while number of the vehicle 6755 is
same.

9. As there is no dispute to the
fact that it is a case of stock transfer and
there is no intention on the part of dealer to
evade any tax, the minor discrepancy as to
the registration of vehicle in State in the eway bill would not attract proceedings for
penalty under Section 129 and the order
passed by the detaining authority as well as
first
appellate
authority
cannot
be
sustained. Moreover, the Department has
not placed before the Court any other
material so as to bring on record that there
was any intention on the part of the dealer
to evade tax except the wrong mention of
part of registration number of the vehicle in
the e-way bill. The vehicle through which
the goods were transported and the bilty
showed the one and the same number while
only there is a minor discrepancy in Part-B
of the e-way bill where the description of
the vehicle is entered by the dealer."

7. Furthermore, one may rely on the
Supreme Court judgment in M/s. Satyam
Shivam
Papers
(supra)
wherein
the
Supreme
Court
has
examined
the
applicability of the issue of mens rea under
Section 129 of the Act. The relevant
paragraphs of the said judgment are
provided below:-

"6. The analysis and reasoning of
the High Court commends to us, when it is
noticed
that
the
High
Court
has
meticulously examined and correctly found
that no fault or intent to evade tax could
have been inferred against the writ
petitioner. However, as commented at the
outset, the amount of costs as awarded by
the High Court in this matter is rather on
the lower side. Considering the overall
conduct of the petitioner No.2 and the
corresponding harassment faced by the
1814 INDIAN LAW REPORTS ALLAHABAD SERIES
writ petitioner we find it rather necessary
to enhance the amount of costs.

7. Upon our having made these
observations, learned counsel for the
petitioners has attempted to submit that the
questions of law in this case, as regards the
operation and effect of Section 129 of
Telangana Goods and Services Tax Act,
2017 and violation by the writ petitioner,
may be kept open. The submissions sought
to be made do not give rise to even a
question of fact what to say of a question of
law. As noticed hereinabove, on the facts of
this case, it has precisely been found that
there was no intent on the part of the writ
petitioner to evade tax and rather, the
goods in question could not be taken to the
destination within time for the reasons
beyond the control of the writ petitioner.
When the undeniable facts, including the
traffic blockage due to agitation, are taken
into consideration, the State alone remains
responsible for not providing smooth
passage of traffic."

8. Upon perusal of the judgments, the
principle that emerges is that presence of
mens rea for evasion of tax is a sine qua
non
for
imposition
of
penalty.
A
typographical error in the e-way bill
without any further material to substantiate
the intention to evade tax should not and
cannot lead to imposition of penalty. In the
case of M/s. Varun Beverages Limited
(supra) there was a typographical error in
the e-way bill of 4 letters (HR ? 73). In the
present case, instead of ?0401?, ?2224?
was incorrectly entered into the e-way bill
which clearly appears to be a typographical
error. In certain cases where lapses by the
dealers are major, it may be deemed that
there is an intention to evade tax but not so
in every case. Typically when the error is a
minor error of the nature found in this
particular case, I am of the view that
imposition of penalty under Section 129 of
the Act is without jurisdiction and illegal in
law.

9. In light of the above findings, the
impugned orders dated 17.6.2022 and
1.2.2021 are quashed and set-aside. The
consequential reliefs to be provided to the
petitioner within the next four weeks.

10. The writ petition is allowed
accordingly.
----------
(2024) 3 ILRA 1814
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 21.11.2023

BEFORE

THE HON'BLE AJAY BHANOT, J.

Writ Tax No. 1307 of 2023

M/S K.K.R Industries ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Vishwas Pandey, Durga Shanker Shukla, Mahesh
Dwivedi

Counsel for the Respondent:
A.S.G.I., C.S.C., Naveen Chandra Gupta

The Goods and Services Tax (GST) Act,
2017- petitioner is engaged in the business of
sale of scrap items- obtained a GST registration
under the GST Act- show cause notice was
issued to the petitioner proposing to cancel the
registration- as the principal place of business
was not found/available at the time of field visitpetitioner could not tender his reply for various
reasons beyond his control- impugned order
cancelling the GST registration of the petitioner
is not speaking order- authorities have adopted