# M/s Indeutsch Industries Pvt. Ltd., Noida v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 190
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-19
- **Case number:** Writ Tax No. 1314 of 2019
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-indeutsch-industries-pvt-ltd-noida-v-state-of-u-p-ors-51409
- **Pages:** 4

## Headnote

Taxation Law - U.P. Goods and Services
Tax Act, 2017 - Section 129(3) - Penalty
for Incorrect Vehicle Number in E-Way Bill -
Petitioner
challenged
penalty
order
dated
22.06.2018
and
appellate
order
dated
22.06.2019 - Held, goods transported from SEZ
(Noida) to DTA (Delhi) with valid tax invoice, bill
of entry, and E-Way bill, but vehicle number in
E-Way bill (UP14DT-8219) differed from actual
vehicle (UP14BT-8220) due to transporter's lastminute change - Interception occurred hours
after dispatch, with all documents (tax invoice,
bill of entry, packing list) correct except vehicle
number - No evidence of tax evasion intent, as
customs duty and IGST paid, and bill of entry
reflected correct vehicle number - Department
failed to establish intent to evade tax, a
prerequisite for penalty under Section 129(3),
per Falguni Steels Vs St. of U.P. - Mere
technical/clerical
error
in
vehicle
number
insufficient
for
penalty,
as
no
financial
implications
shown
-
Appellate
authority
overlooked
transporter's
explanation
and
petitioner's documents - Impugned orders
quashed, penalty set aside, refund of deposited
amount ordered within four weeks. (Para 6-9)

Writ petition allowed.
List of Cases Cited:

## Text

190 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2024) 2 ILRA 190
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.02.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1314 of 2019

M/s Indeutsch Industries Pvt. Ltd., Noida
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Nishant Mishra

Counsel for the Respondent:
C.S.C.

Taxation Law - U.P. Goods and Services
Tax Act, 2017 - Section 129(3) - Penalty
for Incorrect Vehicle Number in E-Way Bill -
Petitioner
challenged
penalty
order
dated
22.06.2018
and
appellate
order
dated
22.06.2019 - Held, goods transported from SEZ
(Noida) to DTA (Delhi) with valid tax invoice, bill
of entry, and E-Way bill, but vehicle number in
E-Way bill (UP14DT-8219) differed from actual
vehicle (UP14BT-8220) due to transporter's lastminute change - Interception occurred hours
after dispatch, with all documents (tax invoice,
bill of entry, packing list) correct except vehicle
number - No evidence of tax evasion intent, as
customs duty and IGST paid, and bill of entry
reflected correct vehicle number - Department
failed to establish intent to evade tax, a
prerequisite for penalty under Section 129(3),
per Falguni Steels Vs St. of U.P. - Mere
technical/clerical
error
in
vehicle
number
insufficient
for
penalty,
as
no
financial
implications
shown
-
Appellate
authority
overlooked
transporter's
explanation
and
petitioner's documents - Impugned orders
quashed, penalty set aside, refund of deposited
amount ordered within four weeks. (Para 6-9)

Writ petition allowed.
List of Cases Cited:

1. Falguni Steels Vs St. of U.P.; (2024) 15
Centax 67 (All.)

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

(Judgment dictated in Open )

1. Heard Sri Nishant Mishra, learned
counsel appearing on behalf of the
petitioner and Sri Ravi Shankar Pandey,
learned Additional Chief Standing Counsel
for the respondents.

2. This is a petition under Article 226
of the Constitution of India, wherein the
writ petitioner is aggrieved by the order
passed in appeal dated June 22, 2019 and
the order dated June 22, 2018 imposing
penalty under Section 129(3) of the Uttar
Pradesh Goods and Services Tax Act, 2017
(hereinafter referred to as the 'Act').

Facts as narrated in the writ
petition are as follows :-

3. Petitioner is a company, engaged in
manufacturing
Artist
Brush
and
its
materials, for which Petitioner is duly
registered under the GST regime with
GSTN No.09AAACI2206F1Z2. Petitioner
is having its manufacturing unit established
in
Noida
Special
Economic
Zone
(hereinafter referred to as 'SEZ'). In normal
course of business, petitioner sold 102
boxes of Artist Brushes valuing Rs.
16,86,696.68/-
to
one
M/s
Pidilite
Industries
Ltd.,
Delhi
(GSTIN
No.07AAACP4156B1ZU)
vide
Tax
Invoice
No.18-
19/CEN/23
dated
14.6.2018, after charging Integrated Goods
and Service Tax (hereinafter referred to as
the 'IGST') at applicable rate of 18%. Since
the transaction in question was from a SEZ
2 All. M/s Indeutsch Industries Pvt. Ltd., Noida Vs. State of U.P. & Ors.
191
unit to a Domestic Traffic Area (hereinafter
referred to as 'DTA'), hence petitioner also
charged customs duty and SWS (customs)
at the rate of 10% each and also filed Bill
of Entry in respect of the transaction in
question. After preparing tax invoice and
bill
of
entry,
petitioner
contacted
transporter M/s Pawan Roadlines, for
transportation of goods, who agreed to
transport the goods on vehicle bearing
registration no.UP14DT-8219. On the basis
of the information provided by transporter,
petitioner generated e-way bill no. 4110
1410 2307 (valid till 22.6.2018), after
uploading all the required details relating to
the
transaction.
From
the
enquiries
subsequently made by petitioner, it appears
that due to non-availability of vehicle
bearing registration no. UP14DT-8219, the
transporter
provided
another
vehicle
bearing registration no.UP14BT-8220 and
due to inadvertence, petitioner also loaded
the goods in the said vehicle, without even
checking the vehicle number mentioned on
e-way bill. When vehicle loaded with
goods in question was crossing Ghaziabad
via Vasundhara, the same was stopped by
Respondent No.3 for verification of goods
and documents. On being stopped, driver
produced the entire documents available
with him including e-way bill, tax invoice,
bill of entry etc.. On examination of these
documents, Respondent No. 3 directed
driver to take the vehicle to Commercial
Tax Office, Mohan Nagar for physical
verification of goods. Even though the
goods were being transported on the
strength of valid and genuine documents,
specified under Rule 138A, then also
Respondent No.3 passed detention order
detaining the goods on the ground that the
goods were being transported on a vehicle
different from that declared on e-way bill.

Contentions of the Petitioner

4. Counsel appearing on behalf of the
petitioner has submitted that the goods
were accompanied by the tax invoice,
packing list, bill of entry for home
consumption and the e-way bill. He
submitted that the only mistake in all these
documents was that the truck number
written in the e-way bill was incorrect. He
submitted that this mistake had occurred
because of a problem in the initial truck
that was supposed to carry the goods. He
relied on a letter provided by the
transporter 'M/s Pawan Roadlines' that
explained the reasons for the change of the
truck. Counsel submitted that this change in
the vehicle was not noted by the
representative's of the petitioner, and
accordingly, the e-way bill that has been
generated based on the earlier truck number
was sent alongwith the goods. Counsel
further submitted that the bill of entry for
home consumption indicates that custom
duty had been paid and on such document
the number of the truck that was carrying
the goods had been mentioned. He further
submits that this bill of entry had been
issued on June 21, 2018 at NOIDA and the
truck was, thereafter, sent to the consignee's
address in Madoli, Delhi. Counsel further
submitted that there was no question of
evasion of tax as the goods left in the
afternoon and were intercepted at around 4
O'clock in the evening by the authorities.
Counsel further placed the impugned order
passed in appeal and submitted that no
where in the order there is any finding that
there had been any kind of intention to
evade tax. He submitted that as the goods
were in order and there was no discrepancy
in the same with the e-way bill and the
invoices including packing list, there was
no scope of imposition of penalty in the
present case. He further relied on several
judgements of this Court including the
judgement passed in Falguni Steels Vs.
192 INDIAN LAW REPORTS ALLAHABAD SERIES
State of U.P. reported in (2024) 15
Centax 67 (All.) to buttress his argument
that imposition of penalty is invalid in
cases when there is no mens-rea for evasion
of tax.

Contentions of the Respondents

5. Per contra, Mr. Pandey, counsel
appearing
on
behalf
of
respondents
submitted that in the present case the
mistake by the petitioner cannot be seen as
a clerical error as the truck number itself is
different. He further submitted that since
the distance between NOIDA to Madoli,
Delhi is only 100 kilometers, there is
always chance of the e-way bill being used
on several occasions resulting in evasion of
tax. Counsel further distinguished the
judgement passed
in
Falguni
Steels
(Supra) by saying that the factual matrix
therein in that matter was different from the
present case.

Analysis and Conclusion

6. Upon a perusal of the documents
annexed to the writ petition, it is quite
obvious that in the present transaction
goods were moving from a SEZ Unit to
Domestic Traffic Area and the said goods
have been checked by the Custom
authorities. Custom duty and also IGST had
been paid on the said goods. The said
goods were intercepted only two-three
hours after the goods have left the SEZ
Unit, and therefore, it cannot be said that
this e-way bill was wrongly being used. It
is a fact that the burden of proof lies on the
petitioner in certain cases to show that there
was no evasion of tax. However, when the
the error in the documents is only that of a
clerical or typographical error, the initial
burden of proof lies on the department to
show there was intention to evade tax. In
the present case the department has failed
to do so and infact has not even tried to do
so. The documents produced by the
petitioner at the time of the interception
itself indicates that the goods have been
transported from a SEZ Unit to the DTA
after payment of custom duty and payment
of IGST. This fact has not been discredited
by
the
department
in
any
manner
whatsoever. Infact there is complete silence
with regard to the fact whether the
petitioner had made the payment as
indicated in the invoices and the bill of
entry. The department has accordingly
failed to shift the burden of proof on the
petitioner as the only error found by the
department was that the vehicle number
was incorrect. Apart from this one error in
the e-way bill, nothing has been shown by
the department to justify the imposition of
penalty under Section 129(3) of the Act.
The impugned order also failed to take into
account the document produced by the
petitioner of the transporter wherein the
explanation was given with regard to the
reason for the mistake of the vehicle
number in the e-way bill.

7. One may reiterate the principles
laid down in the judgment of Falguni
Steels (Supra) with regard to imposition of
penalty. Relevant paragraph nos.19 and 20
are delineated below :-

"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 measure to ensure compliance with
tax laws and regulations. However, a
nuanced understanding prevails within
2 All. M/S Abhishek Trading Corporation, Varanasi Vs. Commissioner (Appeals), CGST &
 Central Excise Appeal Commissionerate, Allahabad & Anr.
193
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."

8. On the perusal of the above principles,
it is clear that intention to evade tax is sine qua
non before imposition of penalty. In present
case the department has failed to establish any
such intention whatsoever. Furthermore, the
Appellate Authority has failed to look into all
the documents that were produced by the
petitioner to rebut the allegation of the
department with regard to intention to evade
tax.

9. In light of the same, impugned orders
dated June 22, 2019 and June 22, 2018 are
quashed and set aside. The writ petition is
allowed. Consequential reliefs to follow.

10. Any amount that has been deposited
by the petitioner to be refunded within a period
of four weeks from date.
----------
(2024) 2 ILRA 193
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.01.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1394 of 2023

M/S
Abhishek
Trading
Corporation,
Varanasi ...Petitioner
Versus
Commissioner (Appeals), CGST & Central
Excise Appeal Commissionerate, Allahabad
& Anr. ...Respondents

Counsel for the Petitioner:
Sri Suyansh Agrawal

Counsel for the Respondents:
C.S.C., Sri Parv Agarwal

Taxation
Law
-
Central
Goods
and
Services Tax Act, 2017 - Section 107 -
Limitation Act, 1963 - Section 5 - Delay in
Filing Appeal - Petitioner challenged appellate
order dated 28.08.2023 dismissing appeal as
time-barred - Held, appeal filed on 20.07.2023
against order communicated on 13.10.2021