# M/S Mid Town Associates v. Additional Commissioner Grade-2

- **Citation:** (2024) 5 ILRA 837
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-05-09
- **Case number:** Writ Tax No. 433 of 2020
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-mid-town-associates-v-additional-commissioner-grade-2-52003
- **Pages:** 5

## Headnote

A. Integrated Goods and Services Tax Act
(IGST Act), 2017 - Central Goods and
Services Tax Act, 2017 (CGST Act) - E-Way
Bill - Penalty - mens rea - Minor error in
documentation - Under Rule 138 (A) (b) of
the CGST Rules, the person in charge of a
conveyance must carry a copy of the E-Way
Bill in physical form or the E-Way Bill
number in electronic form. The presence of
mens rea for evasion of tax is a sine qua
non for imposing a penalty. A minor error
in documentation cannot be a valid ground
for
passing
penalty
orders
by
the
authorities.

B. In this case, the truck was detained
because the goods were being transported
without an E-Way Bill. The petitioner
downloaded the E-Way Bill on 21.05.2019
at 08:38 AM, and the interception occurred
at 08:52 AM, indicating that the E-Way Bill
was downloaded before the interception.
Although the driver could not provide a
hard copy, he informed the respondent No.
2 about the E-Way Bill number. The
authorities failed to verify the E-Way Bill
number on the GST portal. The respondents
argued that the absence of a hard copy
constituted a violation. However, since the
E-Way Bill was downloaded prior to
interception, and the driver communicated
the E-Way Bill number, respondent No. 2
was unjustified in imposing the penalty.
The only violation was technical, as the EWay Bill was not physically present.
Moreover, the invoice matched the goods
in the vehicle, indicating no mens rea for
tax evasion. The issuance of the show
cause notice and penalty order on the same
day shows that the petitioner was not
given an opportunity to respond, violating
principles of natural justice. (Para 8, 13)

Allowed. (E-5)

List of Cases cited:

## Text

5 All. M/S Mid Town Associates Vs. Additional Commissioner Grade-2 (Appeal), Judicial
 Division IInd, State Tax, Moradabad & Ors.
837
----------
(2024) 5 ILRA 837
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 09.05.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 433 of 2020

M/S Mid Town Associates ...Petitioner
Versus
Additional
Commissioner
Grade-2
(Appeal), Judicial Division IInd, State Tax,
Moradabad & Ors. ...Respondents

Counsel for the Petitioner:
Suyash Agrawal

Counsel for the Respondents:
Arvind Kumar Mishra

A. Integrated Goods and Services Tax Act
(IGST Act), 2017 - Central Goods and
Services Tax Act, 2017 (CGST Act) - E-Way
Bill - Penalty - mens rea - Minor error in
documentation - Under Rule 138 (A) (b) of
the CGST Rules, the person in charge of a
conveyance must carry a copy of the E-Way
Bill in physical form or the E-Way Bill
number in electronic form. The presence of
mens rea for evasion of tax is a sine qua
non for imposing a penalty. A minor error
in documentation cannot be a valid ground
for
passing
penalty
orders
by
the
authorities.

B. In this case, the truck was detained
because the goods were being transported
without an E-Way Bill. The petitioner
downloaded the E-Way Bill on 21.05.2019
at 08:38 AM, and the interception occurred
at 08:52 AM, indicating that the E-Way Bill
was downloaded before the interception.
Although the driver could not provide a
hard copy, he informed the respondent No.
2 about the E-Way Bill number. The
authorities failed to verify the E-Way Bill
number on the GST portal. The respondents
argued that the absence of a hard copy
constituted a violation. However, since the
E-Way Bill was downloaded prior to
interception, and the driver communicated
the E-Way Bill number, respondent No. 2
was unjustified in imposing the penalty.
The only violation was technical, as the EWay Bill was not physically present.
Moreover, the invoice matched the goods
in the vehicle, indicating no mens rea for
tax evasion. The issuance of the show
cause notice and penalty order on the same
day shows that the petitioner was not
given an opportunity to respond, violating
principles of natural justice. (Para 8, 13)

Allowed. (E-5)

List of Cases cited:

1. M/S. Hindustan Herbal Cosmetics Vs St. of U.P.
& ors. (Writ Tax No. - 1400 of 2019, decided on
January 2, 2024)

2. Falguni Steels Vs St. of U.P. (2024) 124 GSTR
10

3. M/S Globe Panel Industries India Private
Limited Vs St. of U.P. & ors. (Writ Tax No. - 141
of 2023, decided on February 5, 2024)

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

1. This is a writ petition under article
226 of the Constitution of India wherein the
petitioner has prayed for the issuance of a
writ of certiorari quashing the impugned
order dated January 4, 2020 passed in appeal
by
Additional
Commissioner
Grade-2
(Appeal), Judicial Division 2nd State Tax,
Moradabad/respondent No. 1. The said
appeal was preferred against the penalty
order dated May 21, 2019 passed by
Assistant Commissioner, State Tax, Mobile
Squad, Unit - III, Moradabad/respondent
No. 2.

FACTS
838 INDIAN LAW REPORTS ALLAHABAD SERIES

2. Factual matrix leading to the instant
petition is delineated below:

a) The petitioner is a registered
dealer, who deals in manufacturing, trading
and exporting of handicraft iron, glass, wax,
marble, tiles, wooden handicraft etc.
 b) On May 20, 2019, the goods in
question were being transferred by the
petitioner from Chandigarh to USA through
Inland Container Depot (ICD), Moradabad
vide Invoice No. MID/126. A truck bearing
No. HR 38 P 8575 was assigned for the
transportation of the said goods from
Chandigarh to Moradabad.

c) On May 21, 2019 at 08:52 am,
the respondent No. 2 intercepted the
aforesaid truck at Moradabad and detained
the same on the ground that the goods
loaded on the truck were being transported
without E-Way bill.

d) Subsequently, an order of
detention under Section 20 of the Integrated
Goods and Services Tax Act (hereinafter
referred to as 'the IGST Act') read with
Section 129 (1) of the Central Goods and
Services Tax Act, 2017 (hereinafter referred
to as "the CGST Act") was passed on the
same day, that is, on May 21, 2019 by the
respondent No. 2 on the ground of
presumption that the goods were being
transported with the intention to evade tax
due to the non production of E-Way Bill.

e) A notice under Section 20 of the
IGST Act read with Section 129 (3) of the
CGST Act dated May 21, 2019 was issued
to the petitioner directing him to show cause
as to why an amount of tax of Rs.2,90,011/-
along with a penalty of same amount ought
not to be recovered from him.

f) On the same day of issuing the
show cause notice, the respondent No.2
passed the penalty order under Section 20 of
the IGST Act read with Section 129 (3) of
the CGST Act.
 g) Against the order dated May 21,
2019 passed by the respondent No. 2, the
petitioner filed an appeal before the
respondent No.1, who vide its order dated
January 4, 2020, dismissed the said appeal
and affirmed the order passed by the
respondent No. 2.

h) Being aggrieved by the order
dated January 4, 2020, the petitioner has
preferred the instant petition.

CONTENTIONS
OF
THE
PETITIONER

3. Sri Suyash Agrawal, learned
counsel appearing on behalf of the petitioner
has made the following submissions:

i. The petitioner had downloaded
the E-Way Bill for the goods in question on
May 21, 2019 at 08:38 am and the
interception took place on the same day at
08:52 am which means the E-Way Bill was
downloaded prior to the interception of the
goods.

ii. In the show cause notice issued
to the petitioner, a time limit of 7 days was
mentioned to submit the reply but without
waiting for 7 days and without giving an
opportunity of hearing to the petitioner, the
respondent No. 2 illegaly passed the penalty
order.

iii.
The
minor
mistake
in
documentation was without any fraudulent
intent or gross negligence and the same was
later on rectified by downloading the E-Way
Bill. This minor mistake of the petitioner is
protected under Section 126 (1) of the CGST
Act.

iv. As provided under rule 138 (A)
(b) of the CGST Rules, the person incharge
of a conveyance shall carry a copy of the EWay Bill in physical form or E-Way bill
number in electronic form. In the present
case, although the driver of the vehicle could
5 All. M/S Mid Town Associates Vs. Additional Commissioner Grade-2 (Appeal), Judicial
 Division IInd, State Tax, Moradabad & Ors.
839
not provide a hard copy of the E-Way Bill to
the respondent No. 2, yet he informed the
respondent No. 2 about the E-Way bill
number.

v. Since the E-Way Bill was
downloaded prior to the interception of the
goods and the driver of the vehicle informed
the respondent No. 2 about the E-Way Bill
number, the respondent No. 2 was not
justified in passing the penalty order.

CONTENTIONS
OF
THE
RESPONDENTS

4. Learned Standing Counsel
appearing on behalf of the respondents has
made the following submissions:

i. At the time of interception, the
vehicle in question was in transit without
there being the mandatory E-Way Bill
which is a clear violation of the provisions
of the Uttar Pradesh Goods and Services Tax
Act, 2017 (hereinafter referred to as 'the
UPGST Act').
 ii. The proceedings under Section
129 (1) of the UPGST Act were initiated in
view of the aforesaid anomaly.
 iii. The proceedings initiated
under Section 129(1) & 129(3) of the
UPGST Act were just, proper and in
accordance with the law.

iv. The penalty imposed and the
entire proceedings were in consonance with
the Rules and Law, particularly highlighting
the necessity of E-Way Bills during
transportation.

v. The appellate authority made
a decision after due consideration of facts
and materials, and thus upheld the penalty
order.

ANALYSSIS AND CONCLUSION

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

6. In the present case, the pivotal
question pertains to the compliance of EWay bill as requried under the provisions of
the CGST/UPGST Act and related rules.
The petitioner contends that compliance was
timely achieved, while the respondents
argued that the absence of an E-Way bill
during transit constituted a violation.

7. The crux of the dispute lies in the
interpretation
of
statutory
provisions
regarding E-Way bill, the presumption of
tax evasion in its absence, and the
procedural fairness in penalty imposition.

8. It is clear from the perusal of the
record that the show cause notice and the
penalty order both were issued on the same
day, which indicates that no opportunity of
hearing was given to the petitioner to submit
his reply which is a gross violation of the
principles of natural justice.

9. Upon a perusal of the E-Way Bill
downloaded by the petitioner, it is clear that
even though the driver could not produce the
hard copy of the E-Way Bill before the
respondent No. 2, yet it was downloaded
prior to the interception of the vehicle.

10. This Court had dealt with a similar
issue in case of M/S. Hindustan Herbal
Cosmetics V. State Of U.P. And 2 Others
(WRIT TAX No. - 1400 of 2019 decided on
January 2, 2024) wherein it has been held
that presence of mens rea for evasion of tax
is a sine qua non for imposition of penalty.
The Court further emphasized that a minor
error in the documentation can not be a valid
ground for passing of the penalty orders by
840 INDIAN LAW REPORTS ALLAHABAD SERIES
the authorities. Relevant paragraph of the
judgment is delineated below:

"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 '5332', '3552' 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."

11. This Court in case of Falguni
Steels v. State of U.P. reported in (2024)
124 GSTR 10 has held that in a case where
the E-Way Bill is downloaded and produced
before passing of the penalty order by the
authorities and no mens rea can be inferred
from the act of the petitioner, there is no
justification in passing of the penalty order
by the authorities. Relevant paragraph of the
judgment is quoted below:

"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,
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 respondent No. 2.
Furthermore, 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."

12. The law laid down in Falguni
Steels (supra) was also followed by this
Court in case of M/s Globe Panel
Industries India Private Limited v. State
Of U.P. And Others (Writ Tax No. - 141 of
2023 decided on February 5, 2024).
Relevant paragraph of the judgment is
extracted below:

"4. This Court in M/s Hindustan
Herbal Cosmetics v. State of U.P. and
Others (Writ Tax No.1400 of 2019 decided
on January 2, 2024) and M/s Falguni Steels
v. State of U.P. and Others (Writ Tax No.146
of 2023 decided on January 25, 2024) held
that mens rea to evade tax is essential for
imposition of penalty. The factual aspect in
the present case did not indicate any
intention
whasoever
to
evade
tax.
Furthermore, the documents that have been
relied upon by the petitioner have not been
considered
by
the
authorities.
The
authorities have dealt with the issue with
regard to the expiry of the E-Way Bill and
held that no explanaiton was offerred by the
petitioner with regard to the fresh
5 All. Shankar Lal Gupta Vs. Ashok Kumar Gupta & Anr.
841
generation of the E-Way Bill, as the same
had expired ten days before the detention.
However, it is to be noted that the goods in
the vehicle were for two e-Invoices and two
E-Way Bills and only one E-Way Bill had
expired. There is no dispute with regard to
the consignor and consignee nor any dispute
with regard to the description of the goods
in the vehicle. In relation to the e-Invoices
and the E-Way Bills, the authorities have not
been able indicate any intention whatsoever
on behalf of the petitioner to evade tax.
Indubitably, there is a technical violation
that has been committed by the petitioner.
However, the authorities have not been able
to indicate in any manner that the E-Way
Bill had been used repeatedly nor have they
made out any case with regard to an
intention to evade tax by the petitioner.
Accordingly, this Court is of the view that
such a technical violation by itself without
any intention to evade tax cannot lead to
imposition of penalty under Section 129(3)
of the Act. This view is fortified by a catena
of judgments as indicated above."

13. In the facts and circumstances, it is
clear that only violation is a technical one
wherein E-Way Bill was not present in the
vehicle. However, it is clear that the E-Way
Bill had been downloaded prior to the
interception of the vehicle. Furthermore,
invoice and the E-Way Bill matched with
the goods in the vehicle, and accordingly,
one can infer that there was no mens rea for
the evasion of tax.

14. In light of the above discussion,
I am of the view that there was no intention
to evade tax on the part of the petitioner.
Further, respondent authorities failed to
check the genuinness of the E-Way Bill
number as informed by the driver from the
GST portal and did not provide an
opportunity of hearing to the petitioner
which was against the principles of natural
justice which strenghtens my view that the
authorties did not act in accordance with the
law.

15. Accordingly, the writ petition is
allowed. The impugned orders dated
January 4, 2020 and May 21, 2019 are
hereby quashed and set aside.

16. The respondent authorities are
directed to refund the amount of tax and
penalty deposited by the petitioner within a
period of four weeks from the date of this
judgment.
----------
(2024) 5 ILRA 841
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.05.2024

BEFORE

THE HON'BLE AJIT KUMAR, J.

Matter Under Article 227 No. 1441 of 2024

Shankar Lal Gupta ...Petitioner
Versus
Ashok Kumar Gupta & Anr. ...Respondents

Counsel for the Petitioner:
Dipti Tiwari, Manas Bhargava

Counsel for the Respondents:
Manish Tandon

Civil Law - Civil Procedure Code,1908 -
Order XXI Rule 97, 98, 99, 100 & 102 -
Transfer of Property Act - Section 52 -
Petitioner claims to be in possession of
property by virtue of transfer of possession
by erstwhile tenant - Executing court
rejected his application filed under O. XXI
R. 97 C.P.C - Held, petitioner is transferee
of property by tenant who was ousted by
decree of eviction - No agreement between
landlord and petitioner - There was no
lawful transfer of premises by tenant to