Penalty under Section 129 of GST Act: Allahabad High Court
Quashes Penalty for non-filling of Part-B of the e-way bill during the
transportation of goods
Case
Overview
- Case Title: Fiserv
Merchant Solutions Private Limited vs. State of UP and Others
- Case Number: Writ
Tax No. 1774 of 2025
- Court: High
Court of Judicature at Allahabad (Chief Justice’s Court)
- Coram: Hon’ble
Chief Justice Arun Bhansali and Hon’ble Justice Vikas Budhwar
- Date of Judgment: 30
April 2025
Summary of
the Case:
The case revolved around
the imposition of a penalty under Section 129(3) of the Uttar Pradesh Goods
and Services Tax Act, 2017 (UPGST Act) on Fiserv Merchant Solutions Pvt.
Ltd., due to the non-filling of Part-B of the e-way bill during the
transportation of goods. The Tax Officer concluded that such non-compliance
amounted to an invalid movement of goods under Rule 138 of the CGST Rules,
thus attracting a penalty.
The petitioner challenged
the order, asserting that the lapse was purely technical and there was no
intent to evade tax. The Allahabad High Court quashed the penalty order, ruling
that without any finding of tax evasion, mere technical non-compliance of
e-way bill provisions cannot justify penal action under Section 129.
Factual
Background:
Fiserv Merchant Solutions
Pvt. Ltd. was transporting goods when their vehicle was intercepted at U.P.
Gate, Ghaziabad. Upon inspection, it was discovered that while the e-way
bill was present, the Part-B (which relates to transporter and
vehicle details) had not been filled in.
This omission prompted
the issuance of a show cause notice to the petitioner. Although Fiserv appeared
in response to the notice, no formal reply was filed by them. Subsequently, the
State Tax Officer imposed a penalty under Section 129(3) of the UPGST Act,
treating the movement of goods as non-compliant with the prescribed rules.
Petitioner’s
Submissions:
Senior Advocate Shri
Prakash Shah, appearing for the petitioner, advanced the following key
arguments:
1. Technical
Lapse Without Malafide Intent: The omission of Part-B
of the e-way bill was an inadvertent and technical mistake, not arising
from any intention to evade tax.
2. Absence
of Finding on Tax Evasion: The impugned penalty order did not
record any specific finding that the petitioner attempted to evade tax, which
is a precondition for invoking Section 129.
3. Consistent
Judicial Precedents: Counsel relied heavily on the ruling in M/s
Precision Tools India vs. State of U.P., Writ-Tax No. 415 of 2023 (decided on
29 January 2024), where the High Court held that absence of Part-B alone,
without a finding of evasion, is insufficient to attract penalty.
4. No
Revenue Loss: Since the goods were fully accounted for
and tax-paid, there was no loss of revenue to the exchequer, and the
penalty was therefore unjust.
Respondents’
Submissions:
Shri Ankur Agarwal,
appearing for the State of UP, made the following submissions:
1. Admitted
Breach of Rule 138: He emphasized that the Part-B of the
e-way bill was indeed unfilled, and this was an undisputed violation of
Rule 138.
2. Validity
of Movement Affected: According to him, an unfilled Part-B
renders the movement of goods invalid, and the imposition of penalty was
justified.
3. Intent
May Be Immaterial: He argued that whether or not there
was an intent to evade tax, the contravention of documentation requirements
warranted penal consequences.
4. Judicial
Precedents Recognized: However, the State did not dispute
that the High Court had consistently held in similar matters that absence of
intent to evade tax is a crucial element in justifying penalties.
Court’s
Findings and Observations:
After hearing both
parties and examining the record, the High Court delivered a reasoned
judgment, emphasizing the following key findings:
1. No Finding of Tax
Evasion in Penalty Order
The Court meticulously
reviewed the penalty order passed by the State Tax Officer and observed:
- It merely recited the breach
of Rule 138 by referring to non-filling of Part-B.
- No observation or conclusion was made
regarding an attempt to evade tax.
- This omission was fatal to the
validity of the penalty order under Section 129.
2. Settled Legal Position
on E-Way Bill Non-Compliance
The Court reaffirmed its
view from prior decisions, including Precision Tools India, that:
“Unless an attempt is
made to evade tax and a finding in this regard is recorded, mere non-filling of
part-B of the e-way bill would not attract penalty under Section 129 of the
Act.”
This ruling, being
consistent and well-settled, was squarely applicable to the facts of the
present case.
3. Technical Breach Not
Sufficient
The Court treated the
lapse as a technical breach without any malafide intent, which cannot
be penalized under Section 129, which is penal in nature and intended to
address actual evasion or attempts at evasion of tax.
Judgment:
In conclusion, the
Division Bench led by Chief Justice Arun Bhansali and Justice Vikas Budhwar
ruled:
- The impugned order dated 20
January 2025 imposing penalty was quashed.
- The writ petition filed by Fiserv
Merchant Solutions Pvt. Ltd. was allowed.
- The Court also directed that since
the petitioner had already deposited the penalty amount under protest,
the same shall be refunded within three weeks from the date of
judgment.
Conclusion:
This judgment is another
reaffirmation of the principle that not every procedural lapse under the GST
regime automatically invites penal consequences. Courts have consistently
emphasized that intent to evade tax is a necessary precondition for invoking
penal provisions like Section 129 of the CGST/UPGST Act.
The Allahabad High Court
has rightly emphasized the doctrine of substantial compliance and
proportionality, ensuring that penalties are not imposed for mere technical or
clerical errors, especially where the taxpayer is compliant and there is no
revenue loss.
This case provides
significant relief to the trade and industry who often face harassment for
minor non-compliances and sets a clear precedent that “non-filling of Part-B of
e-way bill, by itself, does not justify penalty in absence of any attempt to
evade tax.”
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.
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