GST Vidhi | GST Case Law

Minor Error in Place of Delivery in E-Way Bill Cannot Justify Penalty: High Court’s Clear Ruling

Summary of the Case

In a progressive and taxpayer-friendly judgment dated 20 December 2024, the Allahabad High Court quashed detention and penalty orders passed against M/s Vishva Electrotech Ltd., ruling that a minor clerical mistake in the e-way bill regarding the place of delivery cannot justify harsh action under Section 129 of the CGST Act. Despite correct invoices and e-way bills accompanying the goods, the authorities detained the consignment solely because the place of delivery mentioned was Ghaziabad instead of Kanpur. The Court held that once all substantive documents match and no tax evasion intent is shown, such minor discrepancies do not invite penalty. Relying on the binding CBIC Circular dated 31.12.2018 and the judgment in M/s Riya Traders, the Court strongly upheld the rights of businesses under GST law.

1. Case Overview

• Case Name: M/s Vishva Electrotech Ltd. vs. State of U.P. and Others
• Case Number: Writ Tax No. 2177 of 2024
• Neutral Citation: 2024:AHC:199371
• Judgment Reserved: 18.12.2024
• Judgment Delivered: 20.12.2024
• Court: High Court of Judicature at Allahabad

2. Background and Facts

M/s Vishva Electrotech Ltd., a GST-registered company, engaged in the manufacture and sale of air pumps, gas compressors, fans, and ventilators, was conducting an interstate stock transfer.

Event Details:

• Goods were transported from Orissa Branch to Kanpur, Uttar Pradesh.
• Transport Vehicle: Truck No. DL1LAJ3127.
• Documents Available:
• Valid E-invoices,
• Proper E-way bill.

Issue Identified:

• Upon interception on 28.10.2024 by GST authorities:
• Quantity and goods matched perfectly with invoices.
• However, in the e-way bill, the place of delivery was mistakenly shown as Ghaziabad instead of Kanpur.

Action by Authorities:

• Despite substantive correctness, goods were detained and proceedings initiated under Section 129 of the GST Act.
• The authorities passed orders:
• Detaining the goods, and
• Demanding penalty, treating the driver as "owner" despite available documents.

Thus, M/s Vishva Electrotech Ltd. filed the writ petition challenging the seizure and penalty orders.

3. Legal Issues Raised

The following important questions were raised before the Court:

1.    Whether minor clerical errors in an e-way bill can justify detention and penalty under Section 129?

2.    Whether the authorities were bound to treat the consignor/consignee as the owner of goods under the binding CBIC Circular dated 31.12.2018?

3.    Whether substantial compliance and absence of tax evasion intent override minor e-way bill discrepancies?

4.    Whether the authorities ignored binding precedents and circulars?

4. Submissions by the Petitioner

Counsel for the petitioner, Ms. Vedika Nath and Mr. Yashonidhi Shukla, argued:

• Correct tax invoices and e-way bills accompanied the goods.
• Minor error in the "place of delivery" (Ghaziabad instead of Kanpur) was inadvertent.
• No discrepancy in goods found during physical inspection.
• Cited CBIC Circular dated 31.12.2018:
• If proper documents accompany goods, either consignor or consignee must be treated as "owner."
• Cited judgment in M/s Riya Traders vs. State of U.P. (Writ Tax No. 28 of 2023), where the Court ruled:

"Once consignor or consignee comes forward, authorities must treat them as owner and proceed accordingly."

• Also referred to Supreme Court’s ruling in Union of India vs. Arviva Industries (I) Ltd., affirming binding nature of CBIC Circulars on field officers.

5. Submissions by the Respondent

The State authorities, represented by Mr. Ravi Shanker Pandey, contended:

• The e-way bill mentioned Ghaziabad, thus goods were not moving as per declared documents.
• Hence, seizure and penalty were justified under Section 129.

However, the State could not dispute that:

• All other documents matched, and
• There was no intent to evade tax.

6. Relevant Legal Framework

Section 129 of CGST Act, 2017

• Provides for detention, seizure, and penalty if goods are:
• Transported without proper documents, or
• With intent to evade tax.

CBIC Circular dated 31.12.2018

• States that:

"If invoice or other specified documents accompany the goods, consignor or consignee shall be treated as owner."

Legal Principle:

• Substantial compliance must override technical mistakes if no tax evasion intent is found.

7. Court’s Analysis and Findings

Justice Piyush Agrawal conducted a careful and detailed analysis.

Key Observations:

• All documents — e-invoices, e-way bill, bilty — were available and matched with goods.
• Minor error regarding place of delivery was inadvertent clerical mistake.
• No discrepancy regarding quantity or nature of goods was found on physical inspection.
• CBIC Circular dated 31.12.2018 clearly mandates treating consignor or consignee as owner in such cases.
• The petitioner acted promptly and transparently once error was noticed.

The Court observed:

"Once the petitioner being the owner of the goods approached the authorities, they were bound by the Circular dated 31.12.2018 to consider him the owner of the goods."

Further, the Court noted:

• The circular was not superseded or rescinded.
• The State failed to deny petitioner’s pleadings regarding the circular.
• Authorities erred grossly by treating the driver as owner and passing orders against him.

Thus, the Court concluded that:

• Seizure and penalty orders were arbitrary, illegal, and unsustainable in law.

8. Judgment and Final Order

The Court ordered:

• The impugned order dated 06.11.2024 (under Section 129(3)) and Order dated 26.11.2024 (appellate order) are quashed.
• The writ petition is allowed.
• The State authorities are directed to:
• Treat the petitioner as owner as per the CBIC Circular, and
• Pass necessary orders within 10 days of submission of the certified copy of the judgment.

Thus, full relief was granted to M/s Vishva Electrotech Ltd..

9. Conclusion

The judgment reinforces vital GST law principles:

• Minor clerical mistakes in an e-way bill cannot lead to harsh penal consequences when substantial compliance exists.
• Authorities must act fairly, following binding circulars and judicial precedents.
• Mens rea (tax evasion intent) remains a necessary ingredient for penalty under Section 129.
• GST enforcement must not become oppressive, especially against honest businesses making minor errors.

Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.

Find the Attachment (Press on Click Here )

Click here