M/S Shanu Events vs. State Of U P And 2 Others

Held

The Court held that the imposition of tax and demand of penalty were wholly unfounded. It found that the mistake in filling up the e-way bill, specifically the place of shipment and destination, was inadvertent and bonafide. The Court reasoned that once the place of shipment was disclosed as Haridwar, Uttarakhand, there was no logical reason to fill in the destination as Madhya Pradesh with the Katni pin code. The Court observed that there was no allegation or material suggesting any ill-intent on the part of the assessee to evade tax. The breach was considered technical and not substantial. Consequently, the order imposing tax and penalty and the appellate order confirming it were set aside as perverse. The Court directed that any security and penalty deposited by the petitioner be returned in accordance with the law.

Facts

The petitioner, M/s Shanu Events, an event management firm, was transporting LED panels from its place of business in Katni, Madhya Pradesh, to a contract at Kumbh Mela, Haridwar, Uttarakhand. While in transit through Uttar Pradesh, the vehicle was stopped for inspection. The e-way bill incorrectly stated the place of shipment as "Kumbh Mela, Haridwar, Uttarakhand" followed by "Madhya Pradesh - 483501", the pin code of Katni. This inadvertent error caused the software to auto-generate the destination as within 100 kms and set the e-way bill validity to one day, expiring on 24.12.2020. Consequently, the goods were seized, and tax and penalty totaling Rs. 4,32,000/- were demanded. The petitioner's appeal against the order dated 28.12.2020 was dismissed by the appellate authority on 5.3.2021.

Key Issues

1. Whether the imposition of tax and penalty under Section 129(3) of the U.P. Goods and Services Tax Act, 2017, is justified when the goods were accompanied by an e-way bill that contained an inadvertent and technical error in the place of shipment and destination, without any evidence of ill-intent to evade tax? The petitioner argued that the error in the e-way bill was a bonafide and inadvertent mistake. They contended that the place of shipment was correctly identified as Haridwar, Uttarakhand, and the subsequent incorrect entry of the Madhya Pradesh pin code was a technical glitch. The petitioner asserted that there was no ill-intent to transport the goods for sale and that the breach was purely technical, not a real one. They relied on the fact that the goods were old and the error did not indicate any attempt to evade tax. The respondent (State) did not present any arguments as recorded in the judgment.