# M/s Falguni Steels v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 146
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-25
- **Case number:** Writ Tax No. 146 of 2023
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-falguni-steels-v-state-of-u-p-ors-51279
- **Pages:** 12

## Headnote

Civil Law - U.P. Goods and Services Tax
Act, 2017 - Penalty for Non-Generation of eWay Bill - The petitioner challenged the orders
dated 21.02.2019 and 20.10.2019 imposing tax
and
penalty
under
Section
129(3)
for
transporting goods without an e-Way Bill - Held,
the absence of an e-Way Bill due to technical
glitches and local administrative restrictions
(Maghi Purnima, Kumbh Mela 2019) did not
indicate intent to evade tax, as tax invoices with
vehicle details were present and e-Way Bills
were generated before the penalty order,
rendering the penalty unjustified. (Paras 2, 6, 8,
13, 16, 17)

Intent to Evade Tax - Mandatory for
Penalty
Under
Section
129
-
The
respondents argued that the absence of an eWay Bill at the time of inspection violated Rule
138 of the UPGST Rules, 2017 - Held, as per
VSL Alloys (India) Pvt. Ltd. Vs St. of U.P.,
Shyam Sel and Power Ltd. Vs St. of U.P., and
other precedents, penalty under Section 129
requires proof of intent to evade tax, which was
absent here since CGST and SGST were paid
and
no
discrepancies
were
found
in
accompanying documents. (Paras 7, 9, 10, 11,
15, 16, 18)

Natural Justice and Non-Reasoned Orders
- The petitioner contended that the orders of
Respondent No. 2 and Respondent No. 3 were
non-speaking and violated natural justice -
Held,
Respondent
No.
2's
order
lacked
reasoning beyond rejecting e-Way Bills as an
afterthought, and Respondent No. 3's ex parte
order erroneously St.d that intent to evade tax
was not required under the UPGST Act, 2017,
contrary to established law, making both orders
arbitrary and unsustainable. (Paras 3, 13, 17,
18)

Writ of Certiorari - Jurisdictional Error -
The petitioner sought a writ of certiorari to
quash the impugned orders for exceeding
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
147
jurisdiction - Held, as per Central Council for
Research in Ayurvedic Sciences Vs Bikartan Das
and Nagendra Nath Bora Vs Commissioner of
Hills Division, a writ of certiorari is warranted to
correct
jurisdictional
errors
or
procedural
irregularities, and the authorities' imposition of
penalty without evidence of tax evasion
constituted such an error, justifying quashing of
the orders. (Paras 22, 23, 24, 25, 26)

Technical Errors vs. Intentional Evasion -
The court emphasized that penalties should not
be imposed for mere technical errors without
financial implications - Held, the non-generation
of one e-Way Bill before detention was a
technical error, not a deliberate act of tax
evasion, as supported by Modern Traders Vs St.
of U.P. and Axpress Logistics Pvt Ltd. Vs U.O.I.,
and the presence of valid tax invoices further
negated any intent to evade, warranting refund
of the deposited tax and penalty. (Paras 11, 12,
14, 16, 19, 27)

Writ Petition Allowed - Orders Dated
21.02.2019 and 20.10.2019 Quashed -
Refund Ordered.

List of Cases Cited:

## Text

_Characters 0–39,789 of 41,120. This is a partial read: ask again with offset=39789 for what follows._

146 INDIAN LAW REPORTS ALLAHABAD SERIES

(26) In view of the discussions made
above, the question posed for consideration
in the revisions is answered in favour of the
assessee and it is held that the Tribunal has
committed manifest error of law in not
complying the provisions of Clause 5 of
Section 63 of the Rules, 2008. In view of
the direction issued, alternative issues
between the revisionist and revenue are not
required to be examined any further.

(27) Accordingly, the impugned order
dated 08.12.2016 is hereby set-aside. As a
consequence thereof, the consequential
impugned orders dated 04.11.2022 passed
on the recall application and rectification
application are also set-aside. The matter is
remanded
to
the
Tribunal
for
redetermination, in terms of the discussion
made above, after affording opportunity to
the parties, expeditiously, say within a
period of three months from the date of
production of a certified copy of this order
in accordance with law.

(28) It is clarified that the parties shall
not seek any unnecessary adjournment
before the learned Tribunal.

(29) The above-captioned revisions
stands allowed in the aforesaid term.
----------
(2024) 2 ILRA 146
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.01.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 146 of 2023

M/s Falguni Steels ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Ajay Kumar Yadav

Counsel for the Respondents:
Sri Rishi Kumar, Addl. Chief Standing
Counsel

Civil Law - U.P. Goods and Services Tax
Act, 2017 - Penalty for Non-Generation of eWay Bill - The petitioner challenged the orders
dated 21.02.2019 and 20.10.2019 imposing tax
and
penalty
under
Section
129(3)
for
transporting goods without an e-Way Bill - Held,
the absence of an e-Way Bill due to technical
glitches and local administrative restrictions
(Maghi Purnima, Kumbh Mela 2019) did not
indicate intent to evade tax, as tax invoices with
vehicle details were present and e-Way Bills
were generated before the penalty order,
rendering the penalty unjustified. (Paras 2, 6, 8,
13, 16, 17)

Intent to Evade Tax - Mandatory for
Penalty
Under
Section
129
-
The
respondents argued that the absence of an eWay Bill at the time of inspection violated Rule
138 of the UPGST Rules, 2017 - Held, as per
VSL Alloys (India) Pvt. Ltd. Vs St. of U.P.,
Shyam Sel and Power Ltd. Vs St. of U.P., and
other precedents, penalty under Section 129
requires proof of intent to evade tax, which was
absent here since CGST and SGST were paid
and
no
discrepancies
were
found
in
accompanying documents. (Paras 7, 9, 10, 11,
15, 16, 18)

Natural Justice and Non-Reasoned Orders
- The petitioner contended that the orders of
Respondent No. 2 and Respondent No. 3 were
non-speaking and violated natural justice -
Held,
Respondent
No.
2's
order
lacked
reasoning beyond rejecting e-Way Bills as an
afterthought, and Respondent No. 3's ex parte
order erroneously St.d that intent to evade tax
was not required under the UPGST Act, 2017,
contrary to established law, making both orders
arbitrary and unsustainable. (Paras 3, 13, 17,
18)

Writ of Certiorari - Jurisdictional Error -
The petitioner sought a writ of certiorari to
quash the impugned orders for exceeding
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
147
jurisdiction - Held, as per Central Council for
Research in Ayurvedic Sciences Vs Bikartan Das
and Nagendra Nath Bora Vs Commissioner of
Hills Division, a writ of certiorari is warranted to
correct
jurisdictional
errors
or
procedural
irregularities, and the authorities' imposition of
penalty without evidence of tax evasion
constituted such an error, justifying quashing of
the orders. (Paras 22, 23, 24, 25, 26)

Technical Errors vs. Intentional Evasion -
The court emphasized that penalties should not
be imposed for mere technical errors without
financial implications - Held, the non-generation
of one e-Way Bill before detention was a
technical error, not a deliberate act of tax
evasion, as supported by Modern Traders Vs St.
of U.P. and Axpress Logistics Pvt Ltd. Vs U.O.I.,
and the presence of valid tax invoices further
negated any intent to evade, warranting refund
of the deposited tax and penalty. (Paras 11, 12,
14, 16, 19, 27)

Writ Petition Allowed - Orders Dated
21.02.2019 and 20.10.2019 Quashed -
Refund Ordered.

List of Cases Cited:

1. VSL Alloys (India) Pvt. Ltd. Vs St. of U.P.,
2018 SCC OnLine All 6080

2. Shyam Sel and Power Ltd. Vs St. of U.P.,
2023:AHC:191074

3.
J.K.
Cement
Ltd.
Vs
St.
of
U.P.,
MANU/UP/2812/2023

4. Roli Enterprises Vs St. of U.P., [2024] 158
taxmann.com 468 (Allahabad)

5. Modern Traders Vs St. of U.P., 2018 SCC
OnLine All 6054

6. Axpress Logistics Pvt Ltd. Vs U.O.I., 2018
SCC OnLine All 6089

7. Hindustan Herbal Cosmetics Vs St. of U.P.,
[2024] taxmann.com 200 (Allahabad)

8. Central Council for Research in Ayurvedic
Sciences Vs Bikartan Das, 2023 SCC OnLine SC
996
9. Nagendra Nath Bora Vs Commissioner of Hills
Division, Assam, 1958 SCC OnLine SC 45

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

1. The instant writ petition has been
filed by the petitioner, M/s Falguni Steels
praying for the issuance of a writ of
certiorari against the order dated February
21,
2019
passed
by
the
Assistant
Commissioner, Commercial Tax, (Mobile
Squad), Unit - II, Prayagraj (hereinafter
referred to as 'Respondent No. 2') and the
order dated October 20, 2019 passed by the
Additional Commissioner, Grade - 2,
(Appeal) - I, Commercial Tax, Prayagraj
(hereinafter referred to as 'Respondent No.
3').

Facts

2. Factual matrix of the instant case
has been laid down below:

a. The petitioner is an authorized
dealer of the Steel Authority of India Ltd.
(hereinafter referred to as 'SAIL'). On
February 17, 2019, the petitioner purchased
a consignment of TMT Bar under the Tax
Invoice
Nos.
OS0020005822
&
OS0020005823. The said tax invoices were
issued by SAIL in accordance with the
provision of Section 31 of the Central
Goods and Services Tax Act, 2017
(hereinafter referred to as the 'CGST Act,
2017') read with Rule 46 of the Central
Goods and Services Tax Rules (hereinafter
referred to as the 'CGST Rules, 2017').

b.
Thereafter,
the
petitioner
obtained the service of a private road
carrier for the transportation of its goods
through vehicle bearing registration No.
UP-70-AT-3747 from SAIL Yard, Naini,
Allahabad, to Falguni Steels, Lookerganj,
148 INDIAN LAW REPORTS ALLAHABAD SERIES
Allahabad. The tax invoices contained the
number of the said vehicle.

c. The petitioner alleges that
during the relevant time, the e-Way Bill
portal of the Department was marred by
glitches and technical shortcomings and
owing to the said fact, e-Way Bills on
several occasions could not be generated by
the Transporters/Consignors/Consignees.

d. Owing to the above stated
glitch, e-Way Bills could not be generated
by
the time of the
onset
of the
transportation of the Good. The said e-Way
Bills were generated on February 20, 2019
(No. 47051859886) and February 21, 2019
(No. 481051862043). The petitioner states
that the said e-Way Bills were presented
before the Respondent No. 2 at the time of
the interception of the goods and before the
issuance of the Show Cause Notice as well
as passing of the order under Section
129(3) of the Uttar Pradesh Goods and
Services Tax Act, 2017 (hereinafter referred
to as the 'UPGST Act, 2017'). However,
the said e-way Bills were not taken into
consideration by the Respondent No. 2.

e.
The
supplier
SAIL
had
generated Invoices Nos. OS0020005822
and OS0020005823, both dated February
17, 2019 wherein the quantity, description
of goods and the vehicle number were
mentioned. The petitioner states that the
transportation of the goods on the same day
was not possible due to the barrier imposed
by
the
local
administration
for
transportation, due to the occasion of
"Maghi Purnima, Kumbh Mela, 2019".
These goods were transported on February
20, 2019 from SAIL Yard, Naini to
Lookerganj, Allahabad.

f. Show Cause Notice (FORM
GST MOV - 07) was issued to the
petitioner under Section 129(3) of the
UPGST Act, 2017 on February 21, 2019
alleging that the movement of the goods
was in contravention to the provisions of
the UPGST Act, 2017. The said Show
Cause Notice required the petitioner to
show cause as to why tax of an amount of
INR 1,29,862/- along with an equivalent
penalty of INR 1,29,862/- ought not to be
recovered from it.

g. The petitioner, thereinafter,
deposited the amount of INR 2,59,724/-
through CPIN No. 19020900359828 dated
February 21, 2019 via Reserve Bank of
India towards tax and penalty, after which,
the Respondent No. 2, released the goods in
favor of the petitioner. Aggrieved by the
order dated February 21, 2019, passed by
the Respondent No. 2, the petitioner
preferred a statutory appeal before the
Respondent No. 3.

h. Respondent No. 3, vide its
order dated October 20, 2019, which was
passed under Section 107 of the UPGST
Act, 2017, upheld the order dated February
21, 2019, passed by the Respondent No. 2
and confirmed the tax liability and penalty,
imposed by the Respondent No. 2.

i. Aggrieved from the order dated
February
21,
2019
passed
by
the
Respondent No. 2 and the order dated
October
20,
2019,
passed
by
the
Respondent No. 3, the petitioner has
preferred the instant writ petition before
this Court.

Contentions of the petitioner

3. Shri Ajay Kumar Yadav, learned
counsel appearing for the petitioner has
advanced the following arguments:

a. As per the FORM GST MOV06,
dated
February
20,
2019,
the
Respondent No. 2 had inspected the vehicle
no. UP-70-AT-3747 on February 20, 2019
at 23:37:09 at Bairahana Power House.
However, as per the FORM GST MOV-07,
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
149
dated February 21, 2019, the statement of
the vehicle owner was taken at the same
time on February 20, 2019 at 23:27:09
which is practically not possible. There is
some controversy.

b. In the order passed by the
Respondent No. 2, it has been stated that
both the e-Way Bills were generated by the
petitioner after detention (i.e. 23:37:09 on
February 20, 2019). However, as per the
facts of the case, the petitioner has
generated one e-Way Bill before the
detention and the second e-Way Bill after
the detention due to technical glitches on
the Portal.

c. The Respondent No. 3, also
ended up faltering in its duties. Without
mindfully
appreciating
the
arguments
advanced by the petitioner, it went ahead
and upheld the order of the Respondent No.
2. The said order passed by the Respondent
No. 2 is a non-speaking order as the
Respondent No. 2 did not afford any reason
behind the decision taken by it. The only
reason afforded by the Respondent No .2 is
that the e-Way Bill so produced is an
afterthought and that the goods were to be
mandatorily accompanied with an e-Way
Bill and in the absence of the same, liability
is bound to arise.

d. In response to the appeal filed
before the Respondent No 3, it had issued a
notice for personal hearing, wherein it had
fixed the date of hearing on July 26, 2019.
In response to this notice, the counsel of the
petitioner appeared before the Respondent
No. 3. Thereafter, the Respondent No. 3
had adjourned the date for hearing to
October
10,
2019.
Owing to
some
unavoidable reasons, the counsel of the
petitioner failed to appear before the
Respondent No. 3 as well as the counsel of
the petitioner forgot to inform the petitioner
about the said date of hearing. Thereafter,
the Respondent No. 3 passed an ex parte
order on October 20, 2019, in all haste and
hurry coupled with malafide intentions. The
said act of the Respondent No. 3 is in gross
violation of the principles of natural justice
and against the provisions of Sections 107
(8), 107 (9), and 107(10) of the CGST Act,
2017 and the UPGST Act, 2017.

e. Although the Respondent No. 3
passed an ex-parte order on October 20,
2019 within 10 days from the last hearing
date the same was served to the petitioner
only on March 20, 2020, that is after five
months from the date of the passing of the
said order. This shows that the order was
passed in violation of the principles of
natural justice.

f. The Respondent No. 3 passed
the order without applying its mind and
without considering the grounds of appeal
and facts of the case. It upheld the order of
the Respondent No. 2 without giving any
reasonable findings on the grounds of
appeal.

g. Impugned orders passed by the
Respondent No. 2 and the Respondent No 3
are wholly illegal, arbitrary, against the
principles of natural justice, and contrary to
law. The Respondent No. 2 and the
Respondent No. 3 have completely failed to
appreciate the facts of the case as well as
the applicable law.

h. It is a settled law that if the eWay Bill is generated and produced before
the passing of the order under Section
129(3) of the CGST Act, 2017/UPGST Act,
2019 and if the goods are carried with all
the other relevant documents evidencing
payment of due tax, then in that case the
detention and seizure of goods is wholly
baseless and the same defeats the purpose
of the said Acts. The said position has been
clarified by this Court in the case of
Modern Traders v. State of UP (Writ Tax
No. 762 3 of 2018). The writ petition in the
150 INDIAN LAW REPORTS ALLAHABAD SERIES
said case was allowed and the penalty order
therein was set aside.

i. In the instant case, the
petitioner had also generated and produced
the e-Way Bill on February 20, 2019 at
11:34 P.M. (i.e. before the detention which
was made at 23:23:09 on February 20,
2019) and on February 21, 2019 at 12:46
A.M.(i.e. before the passage of the Order
dated February 21, 2019 under Section
129(3) of the UPGST Act, 2017). In view
of the same, the impugned order passed by
the Respondent No. 2 is liable to be
quashed with the grant of consequential
relief to the petitioner.

j. There is no intention of the
evasion of tax by the petitioner.

k. When goods were transported
along with the specified documents, in
which no discrepancy was found, detention
of goods under Section 129 of the UPGST
Act, 2017 was wholly without jurisdiction
and illegal. Thus, even on assuming that the
Respondent No 2 had jurisdiction to pass
an order under Section 129 of the UPGST
Act, 2017, then also the movement of
goods was not in contravention of any
provision of the UPGST Act, 2017 and the
rules framed thereunder.

l. Even otherwise, a combined
reading of Sections 68, 129, and 130 of the
UPGST Act, 2017 shows that goods can be
detained and tax and penalty can be
demanded only when the goods are liable
for confiscation, which can be only when
the same are transported in contravention
of the provisions of the UPGST Act,
2017/CGST Act, 2017 and the rules framed
thereunder along with the intention to
evade the payment of tax. In the instant
case, there cannot be any intention to evade
the payment of tax as the CGST and the
SGST were already charged by SAIL and
payments were also made. Additionally, the
vehicle number was mentioned in the
invoices
and
during
the
physical
verification of the goods, no discrepancy
was found.

m. In support of its contentions,
the petitioner also relies on the judgment of
this Court in M/s Axpress Logistics India
Pvt Ltd. v. Union of India (Writ Tax No.
602 of 2018).

Contentions of the Respondents

4. Shri Rishi Kumar, learned
Additional
Chief
Standing
Counsel,
appearing on behalf the respondents, has
made the following submissions:

a. At the time of inspection, eWay Bill, which is mandatory, was not
generated. This is a clear violation of the
Rule 138(a) of the UPGST Rules, 2017. As
per Rule 138 of the UPGST Rules, 2017, eWay Bill should mandatorily be generated
before starting the movement of the vehicle
and ought to be furnished before the
intercepting authorities in the case of
interception. Reply submitted by the
authorized representative of the petitioner
before the Respondent No. 2 was not
satisfactory and hence the Respondent No.
2 passed the penalty order under Section
129(3) of the UPGST Act, 2017.

b. The Appellate Authority i.e. the
Respondent No. 3 also provided ample
opportunity of hearing to the petitioner on
the appeal filed by it but no one appeared
on behalf of the petitioner at the time of the
hearing and hence the Appellate Authority
decided the appeal on the basis of facts and
documents available on record. Vide order
dated October 20, 2019, the Respondent
No. 3 upheld the penalty order passed by
the Respondent No 2 and the said decision
of the Respondent No 3 is just, proper, and
in accordance with the law.

Analysis and Conclusion
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
151

5. I have heard the learned counsel
appearing for the parties and perused the
materials on record.

6. Even though the petitioner failed to
produce the e-Way Bill in time due to
certain technical difficulties, the question
which arises before me is whether or not
there was any actual intent to evade tax on
part of the petitioner.

7. In the case of VSL Alloys (India)
Pvt. Ltd. v. State of U.P. and Another
reported in 2018 SCC OnLine All 6080,
while dealing with a situation where Part-
B of the e-Way Bill was not generated, this
Court observed that the petitioner therein
was supposed to fill up Part- B of the eWay Bill giving all the details including the
vehicle number before the goods were
loaded in a vehicle, and it failed to do so.
However, there was no ill intention at the
hands of the petitioner therein to evade tax,
since the documents accompanying the
goods contained all the relevant details.
Relevant
paragraphs
from
the
said
judgment have been extracted below :-

"13. We are in full agreement
with the submission of the learned counsel
for the petitioner and after perusal of the
relevant documents, we find no ill intention
at the hands of the petitioner nor the
petitioner was supposed to fill up Part-B
giving all the details including the vehicle
number before the goods are loaded in a
vehicle, which is meant for transportation
to the same to its end destination.

14. In the present case, all the
documents were accompanied the goods,
details are duly mentioned which reflects
from the perusal of the documents. Merely
of none mentioning of the vehicle no. in
Part-B cannot be a ground for seizure of
the goods. We hold that the order of seizure
is totally illegal and once the petitioner has
placed the material and evidence with
regard to its claim, it was obligatory on the
part of respondent No. 2 to consider and
pass an appropriate reasoned order. In this
case, no reasons are assigned nor any
discussion is mentioned in the impugned
order of seizure and notice of penalty.
Respondent No. 2 has also not considered
the above notification dated March 7, 2018.

15. In view of the aforesaid facts,
the impugned seizure order dated April 9,
2018 passed under section 129 (1) and also
the consequential show-cause notice dated
April 9, 2018 passed/issued under section
129(3) of the Act are quashed. The
respondents are directed to release the
goods as well as vehicle, seized on April 9,
2018, forthwith in favour of the petitioner."

8. In the instant case before me,
although the petitioner failed to generate
the e-Way Bill on time, the Tax Invoices
issued contained all the relevant details
including
the
detail
of
the
vehicle
transporting the goods. Morever, the CGST
and the SGST were already charged by
SAIL. Therefore, no intention to evade tax
is evident in this case.

9. In the case of M/s. Shyam Sel and
Power Ltd. v. State of U.P. and Others
reported in 2023:AHC:191074, this Court
emphasized
that
for
invoking
the
proceedings under Section 129(3) of the
CST Act, 2017, intention to evade tax is
mandatory. Relevant paragraphs have been
extracted below:-

"10. For invoking the proceeding
under section 129(3) of the CGST Act,
section 130 of the CGST Act was required
to be read together, where the intent to
evade payment of tax is mandatory, but
while issuing notice or while passing the
152 INDIAN LAW REPORTS ALLAHABAD SERIES
order of detention, seizure or demand of
penalty, tax, no such intent of the petitioner
was observed. Once the dealer has
intimated the attending and mediating
circumstances under which e-way bill of
the purchasing dealer was cancelled, it was
a minor breach. The authority could have
initiated proceedings under section 122 of
the CGST Act instead of proceedings under
section 129 of the CGST Act. Section 129 of
the CGST Act must be read with section
130 of the said Act, which mandate the
intention to evade payment of tax. Once the
authorities have not observed that there
was intent to evade payment of tax,
proceedings under section 129 of the CGST
Act ought not to have been initiated, but it
could be done under section 122 of the
CGST Act in the facts & circumstances of
the present case. It is also not in dispute
that after release of the goods, the same
were sold to P.L. Trading Company.

11. Section 129 of the CGST Act
deals with detention, seizure and release of
goods in case violation of the provisions of
the CGST Act is found. Section 130 deals
with confiscation of goods or conveyance
and levy of penalty. Both the sections
revolve around a similar issue and provide
for the proceedings available at the hands
of the proper Officer upon him having
found the goods in violation of the
provisions of the Act, Rule 138 of the Rules
framed under the CGST Act being one of
them. Upon a purposive reading of the
sections, it would sufice to state that the
legislation makes intent to evade tax a sine
qua non for initiation of the proceedings
under sections 129 and 130 of the CGST
Act."

10. In J.K. Cement Ltd. v. State of
U.P.
and
Others
reported
in
MANU/UP/2812/2023, this Court stated
that even if there is no e-Way bill being
carried, if there is no discrepancy in the
documents accompanying the goods and no
intention to evade tax, then penalty cannot
be levied. Relevant paragraph has been
extracted below -

"11. On perusal of the impugned
order it is also found that it is categorically
mentioned that the origination as well as
termination of the goods in question was in
State of Madhya Pradesh meaning thereby
the authorities are of the view that the
goods were not to be unloaded in the State
of UP or any intention to avoid tax.
However, mainly on the ground of some
small technical fault for not carrying the eway bill, the penalty ought not to have been
levied in the absence of any discrepancy in
document accompanying the goods. In view
of above, the impugned orders cannot be
sustained in the eyes of law."

11. In Roli Enterprises v. State of UP
and Others reported in [2024] 158
taxmann.com 468 (Allahabad) this Court
noted that the non - generation of Part B of
e-Way Bill was a mere technical error, and
since the invoice contained the details of
the vehicle transporting the goods, there
was no intention on part of the petitioner
therein to evade tax. Accordingly, the
penalty levied in the said case, was held to
be unjustified.

12. In Modern Traders v. State of
U.P. and Others reported in 2018 SCC
OnLine All 6054, which was relied upon
by the petitioner, this Court was dealing
with a case wherein the vehicle carrying the
goods was intercepted solely on the ground
that there was no e-Way Bill accompanying
the goods. The e-Way Bill in the said case
was generated as soon as information about
interception of the vehicle was received.
Accordingly, this Court concluded that
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
153
once e-Way Bill has been produced and if
all the relevant documents accompanied the
goods, then seizing the goods and imposing
penalty cannot be justified. Relevant
paragraphs have been extracted below: -

10. The learned counsel for the
petitioner has also brought to our notice
that respondent No. 3, with malice
intention, has deliberately not mentioned
the time in either of the orders passed being
the seizure order under section 129(1) and
penalty under section 129(3). Both the
aforesaid orders are passed on May 5,
2018, i.e., before the date which has been
indicated in the interception memo being
May 6, 2018. Learned counsel for the
petitioner has submitted that since the
petitioner has placed the e-way bill on
May 5, 2018 itself respondent No. 3 has
illegally proceeded to pass the impugned
orders before any physical verification
done.

11. We find substance in the
submission of the learned counsel for the
petitioner. Once the e-way bill is produced
and other documents clearly indicates that
the goods are belongs to the registered
dealer and the IGST has been charged
there remains no justification in detaining
and seizing the goods and asking the
penalty.

13. Upon a bare reading of the
aforesaid judgment, one cannot help, but
draw a parallel between the factual
situation in the aforesaid judgment, and the
factual situation in the instant case. Before
the order imposing penalty was passed, the
petitioner in the instant case had generated
both the e-Way Bills which the Respondent
No. 2 failed to take into account.
Furthermore, this failure on the part of the
Respondent No. 2 was not corrected by the
Respondent No. 3. Imposition of penalty
must be backed by potent reasoning, which
to me, seems missing here.

14. In Axpress Logistics Pvt Ltd. v.
Union of India and Others reported in
2018 SCC OnLine All 6089, this Court
quashed the penalty order issued under
Sections 129(1) and 129(3) of the UPGST
Act, 2017, since the petitioner therein had
produced e-Way Bill before the detention
and seizure of the goods and vehicle. Even
though, in the case before me, the petitioner
generated one e-Way Bill subsequent to the
detention of goods, the other e-Way Bill
was generated before the detention of
goods. In any case, both the e-Way Bills
were produced by the petitioner before the
order imposing penalty was passed.

15. What emerges from a perusal of
the aforesaid judgments is that, if penalty is
imposed, in the presence of all the valid
documents, even if e-Way Bill has not been
generated, and in the absence of any
determination to evade tax, it cannot be
sustained. Order dated February 21, 2019
passed by the Respondent No. 2 and the
order dated October 20, 2019 passed by the
Respondent No. 3, in the instant case stand
on a foundationless ground, since there is
no intention to evade tax, which could
sustain the impugned orders.

16. In the present factual matrix, it is
clear that the goods were accompanied by
the tax invoices. Furthermore, the tax
invoices contained the details of the vehicle
that was transporting the goods. It is further
to be noted that one e-Way Bill was
generated before the detention and one
subsequent to the detention, but before
passing of the order under Section 129(3)
of the UPGST Act, 2017/CGST Act, 2017.
Under these circumstances, there does not
appear to be any intention to evade the tax.
154 INDIAN LAW REPORTS ALLAHABAD SERIES
In addition to the above facts, the
explanation given by the petitioner with
regard to the delay in generation of the eWay Bill due to the barrier imposed by the
local administration on the occasion of
'Maghi Purnima, Kumbh Mela 2019' has
also not been taken into consideration by
the
authorities
below.
Finally,
the
authorities have failed to indicate any
specific reason that would indicate an
intention for evasion of tax. As held by this
Court in Hindustan Herbal Cosmetics v.
State of U.P. , reported in [2024]
taxmann.com 200 (Allahabad), intention
to evade tax is desideratum for the
imposition of penalty. I am of the view that
the
authorities
have
acted
beyond
jurisdiction and imposed tax without there
being any cogent reason for the same. In
light of the above finding, I am of the view
that the petitioner cannot be made to suffer
due to mere technical mistakes that may
have arisen, without there being any
intention to evade tax.

17. Once both the e-Way Bills were
presented before passing of the penalty
order, and all the documents including the
tax invoices, were found to be in order, the
Respondent No. 2 had no sound rationale to
pass the impugned order dated February 20,
2019. A bare reading of the said order
would show that the presence of the tax
invoices, was recorded by the Respondent
No. 2. Furthermore, the Respondent No. 2
also rejected the e-Way Bills which were
generated post the detention of the goods,
since the same in its opinion, was contrary
to the provisions of the UPGST Act,
2017/CGST Act, 2017. Nowhere in the said
impugned order, it has been recorded that
there was any definite intention to evade
tax. The essence of any penal imposition is
intrinsically linked to the presence of mens
rea, a facet conspicuously absent from the
record.
The
order,
therefore,
stands
vulnerable to challenge on the grounds of
disproportionate punitive measures meted
out in the absence of concrete evidence
substantiating an intent to evade tax
liabilities.

18. These errors of jurisdiction,
committed by the Respondent No. 2, ought
to have been corrected by the Respondent
No. 3, while hearing the statutory appeal.
What is also astonishing to me is the
reasoning afforded by the Respondent No.
3 to reject the statutory appeal. Respondent
No. 3 records that while the provisions
under the Uttar Pradesh Value Added Tax
Act, 2008 (hereinafter referred to as the
'UPVAT Act, 2008') mandated establishing
a prior intent to evade tax, there was no
such
provision
in
the
CGST
Act,
2017/UPGST Act, 2017. This reasoning is
palpably erroneous. A penal action devoid
of mens rea not only lacks a solid legal
foundation but also raises concerns about
the proportionality and reasonableness of
the penalties imposed. The imposition of
penalties without a clear indication of
intent may result in an arbitrary exercise of
authority, undermining the principles of
justice. Tax evasion is a serious allegation
that necessitates a robust evidentiary basis
to withstand legal scrutiny. The mere
rejection of post-detention e-Way Bills,
without a cogent nexus to intention to
evade tax, is fallacious.

19. Mere technical errors, without
having any potential financial implications,
should not be the grounds for imposition of
penalties. The underlying philosophy is to
maintain a fair and just tax system, where
penalties are proportionate to the gravity of
the offense. In the realm of taxation,
imposition of penalty serves as a critical
2 All. M/s Falguni Steels Vs. State of U.P. & Ors.
155
measure to ensure compliance with tax
laws and regulations. However, a nuanced
understanding
prevails
within
legal
frameworks that for penalties to be justly
imposed, there must be a demonstrated
actual intent to evade tax. This principle
underscores
the
importance
of
distinguishing
technical
errors
from
deliberate
attempts
to
evade
tax
obligations. Penalties should be reserved
for cases where an intentional act to
defraud the tax system is evident, rather
than for inadvertent technical errors. The
legal foundation for this principle lies in the
recognition that taxation statutes are not
designed to punish inadvertent mistakes but
rather deliberate acts of non-compliance.
The burden of proof, therefore, rests on tax
authorities to establish the actual intent to
evade tax before imposing penalties on
taxpayers. This safeguards individuals and
entities from punitive measures arising
from honest mistakes,
administrative
errors, or technical discrepancies that
lack
any
malicious
intent.
In
the
judgments cited above, the Courts therein
have emphasized upon the need for a
meticulous examination of the facts and
circumstances surrounding each case to
establish the presence or absence of
intentional tax evasion.

20. To conclude, the requirement of
intent to evade tax for the imposition of
penalties is a fundamental principle that
underpins the fairness and integrity of
taxation
systems.
Recognising
the
distinction between technical errors and
intentional
evasion
is
essential
for
maintaining a balanced and equitable
approach to tax enforcement. As nations
continue their pursuit of effective tax
administration, upholding this principle
becomes paramount in fostering voluntary
compliance, preserving trust in the tax
system, and ensuring the judicious use of
regulatory powers.

21. Since the petitioner in the instant
case has prayed for the issuance of the writ
of certiorari, it would be prudent on my
part to, to lay threadbare the principles
governing the issuance of a writ of
certiorari.

22. The writ of certiorari, a legal
remedy originating from the Latin term
meaning "to be more fully informed", holds
a paramount position within the realm of
administrative law. It is a high prerogative
writ issued by superior courts to review and
quash decisions of lower courts, tribunals,
or administrative bodies. This instrument
plays a pivotal role in ensuring the rule of
law
and
judicial
oversight
over
administrative
actions,
providing
a
mechanism to correct errors and prevent
the abuse of power. The writ of certiorari is
not issued as a matter of course, but rather
it is granted at the discretion of the superior
court. Generally, certiorari is issued in
cases involving errors of law apparent on
the face of the record, jurisdictional issues,
or procedural irregularities that may have a
substantial impact on the fairness and
legality of the proceedings.

23. Having already determined that
the
authorities
in
the
instant
case
transcended their jurisdiction while passing
the impugned orders, issuance of the writ
of certiorari is necessitated in the instant
case. Reference is made in this regard to
the Central Council for Research in
Ayurvedic Sciences and Another v.
Bikartan Das and Others, reported in
2023 SCC OnLine SC 996, wherein
Supreme Court upheld that writ of
certiorari can be issued to correct errors of
jurisdiction:-
156 INDIAN LAW REPORTS ALLAHABAD SERIES

"65. Thus, from the various
decisions referred to above, we have no
hesitation in reaching to the conclusion
that a writ of certiorari is a high
prerogative writ and should not be issued
on mere asking. For the issue of a writ of
certiorari, the party concerned has to make
out a definite case for the same and is not a
matter of course. To put it pithily, certiorari
shall issue to correct errors of jurisdiction,
that is to say, absence, excess or failure to
exercise and also when in the exercise of
undoubted jurisdiction, there has been
illegality. It shall also issue to correct an
error in the decision or determination
itself, if it is an error manifest on the face
of the proceedings. By its exercise, only a
patent error can be corrected but not also a
wrong
decision.
It
should
be
well
remembered at the cost of repetition that
certiorari is not appellate but only
supervisory."

24. In Nagendra Nath Bora and
Another v. The Commissioner of Hills
Division and Appeal, Assam and Others
reported in 1958 SCC OnLine SC 45, a
Constitution
Bench,
upon
examining
various Indian and English precents, came
to the conclusion that in that case an
inferior
tribunal
has
exceeded
its
jurisdiction or has not acted in accordance
with the law, a writ of certiorari can be
issued. Relevant paragraphs have been
extracted below:

"36. So far as we know, it has
never been contended before this Court that
an error of fact, even though apparent on
the face of the record, could be a ground
for interference by the court exercising its
writ jurisdiction. No ruling was brought to
our notice in support of the proposition that
the court exercising its powers under
Article 226 of the Constitution, could quash
an order of an inferior tribunal, on the
ground of a mistake of fact apparent on the
face of the record.

37. But the question still remains
as to what is the legal import of the
expression 'error of law apparent on the
face of the record'. Is it every error of law
that can attract the supervisory jurisdiction
of the High Court, to quash the order
impugned? This court, as observed above,
has settled the law in this respect by laying
down that in order to attract such
jurisdiction, it is essential that the error
should be something more than a mere
error of law; that it must be one which is
manifest on the face of the record. In this
respect, the law in India and the law in
England, are, therefore, the same. It is also
clear, on an examination of all the
authorities of this Court and of those in
England, referred to above, as also those
considered in the several judgments of this
Court, that the common-law writ, now
called order of certiorari, which was also
adopted by our Constitution, is not meant
to take the place of an appeal where the
statute does not confer a right of appeal. Its
purpose is only to determine, on an
examination of the record, whether the
inferior
tribunal
has
exceeded
its
jurisdiction or has not proceeded in
accordance
with
the
essential
requirements of the law which it was
meant to administer. Mere formal or
technical errors, even though of law, will
not
be
sufficient
to
attract
this
extraordinary jurisdiction."
(emphasis added)

25. In light of the aforesaid, it
becomes apparent, that the impugned
orders in the instant case are a result of the
Respondent No. 2 and the Respondent No.
3 exceeding their jurisdiction and not
proceeded in accordance with the essential
2 All. The Commissioner, Commercial Tax, U.P., Lucknow Vs. M/s. Godfrey Phillips India Ltd. 157
requirement of the law where it was meant
to adminiter. Therefore, a writ of certiorari
is warranted in the instant case.

26. Accordingly, let there be a writ of
certiorari issued against the order dated
February
21,
2019
passed
by
the
Respondent No. 2 and the order dated
October 20, 2019 passed by the Respondent
No. 3. The said orders are quashed and set
aside.

27. This Court also directs the
Respondent No. 2 to refund the amount of
tax and penalty deposited by the petitioner,
within a period of four weeks from date.

28. The instant writ petition is
allowed in aforesaid terms. There shall be
no order as to the costs.

29. Urgent photostat-certified copy of
this order, if applied for, should be readily
made available to the parties upon
compliance with requisite formalities.
----------
(2024) 2 ILRA 157
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.02.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Commercial Tax Revision No. 150 of 2023

The Commissioner, Commercial Tax, U.P.,
Lucknow ...Revisionist
Versus
M/s. Godfrey Phillips India Ltd.
 ...Opposite Party

Counsel for the Revisionist:
Sri Ravi Shanker Pandey, Additional Chief
Standing Counsel
Counsel for the Opposite Party:
Sri Navin Sinha (Senior Advocate), Sri
Raghav Nayar, Ms. Kalpana Sinha

U.P. Value Added Tax Act, 2008 - Scope of
Revisional Jurisdiction - The revisionist
challenged
the
Tribunal's
order
dated
25.01.2023, which accepted the opposite party's
explanation for a stock discrepancy of 480
cigarette cartons, arguing it was based on
erroneous findings - Held, revisional jurisdiction
under Section 58 is Ltd. to questions of law,
jurisdictional errors, or procedural irregularities,
and the High Court cannot re-examine factual
findings
unless
they
are
perverse
or
unsupported by evidence, as per Hindustan
Petroleum Corporation Ltd. Vs Dilbahar Singh
and Vinod Kumar Tiwari Vs St. of U.P. (Paras 6,
7, 8, 9, 11, 12, 13, 14, 15)