Mere Non-Filling of E-Way Bill Part-B Not Sufficient for
Penalty: Allahabad High Court Quashes GST Penalty Against Tata Hitachi
Summary of
the Case
The Allahabad High Court
set aside a penalty order imposed on Tata Hitachi Construction Machinery Co.
Pvt. Ltd., for transporting goods with an unfilled Part-B of an e-way
bill, holding that a mere technical lapse without intent to evade tax
does not warrant penalty under Section 129 of the UPGST Act.
The Court ruled that
since the adjudicating officer failed to record any finding of intent to
evade tax, the imposition of penalty was illegal and unsustainable.
Case
Overview
- Case Title:
M/s Tata Hitachi Construction Machinery Company Pvt. Ltd. vs. State of
Uttar Pradesh and Others
- Case Number:
Writ Tax No. 2148 of 2025
- Neutral Citation:
2025:AHC:75391-DB
- Court:
High Court of Judicature at Allahabad, Chief Justice’s Court
- Date of Judgment:
9 May 2025
Factual
Background
1. Interception
of Goods: The petitioner’s goods were in transit when
intercepted at Sirsa Cut, in Gautam Buddha Nagar, Uttar Pradesh.
2. Issue
Raised by Authorities: The authorities found that although the
e-way bill was being carried, the Part-B (which contains transporter and
vehicle details) was not filled in. Based on this, a notice was
issued, and the Assistant Commissioner of Mobile Squad–5 imposed a penalty
under Section 129(3) of the U.P. GST Act, 2017.
3. Proceedings
Before Tax Authority: The petitioner submitted a response,
arguing that the lapse was technical and not indicative of any intent to evade
tax. However, the Assistant Commissioner dismissed the submission and
confirmed the penalty based solely on the violation of Rule 138 of the GST
Rules, i.e., for not filling Part-B of the e-way bill.
4. Filing
of Writ Petition: Aggrieved by the order dated 28 April
2025, the petitioner approached the Allahabad High Court seeking relief
against the penalty.
Arguments
by the Petitioner
Learned counsel for Tata
Hitachi, Shri Atul Gupta, advanced the following key arguments:
1. No
Finding of Tax Evasion: The penalty order under Section
129(3) lacked any finding that the petitioner intended to evade tax. The entire
penalty was based only on non-filling of Part-B, which was a technical
omission.
2. Consistency
of Court's View in Similar Cases: The petitioner relied
on the High Court’s judgment in M/s Precision Tools India vs. State of U.P.
(Writ Tax No. 415 of 2023, decided on 29 January 2024), wherein the Court
held that non-filling of Part-B alone, without tax evasion, does not justify
penalty under Section 129.
3. Rule
138 Violation Is Not Conclusive of Evasion: A procedural
lapse in compliance with Rule 138 of the CGST Rules does not
automatically indicate intent to defraud or evade. Therefore, the penalty
imposed was arbitrary and disproportionate.
4. Bank
Guarantee Furnished Under Protest: The petitioner had
provided a bank guarantee equivalent to the penalty amount under
protest, pending judicial review.
Arguments
by the Respondents
Appearing for the State, Standing
Counsel Shri Ankur Agarwal, submitted:
1. Admission
of Breach: It was undisputed that the Part-B of the e-way
bill was unfilled at the time of inspection.
2. Validity
of Movement Questioned: According to the State, this
omission made the movement of goods non-compliant with statutory
provisions, warranting the imposition of penalty under Section 129.
3. Intent
May Not Be Relevant: The respondent’s counsel argued that intent
to evade tax was not a necessary precondition under the Act for the levy of
penalty in such cases.
4. However,
Did Not Dispute Court’s Previous Rulings: Notably, the State did
not dispute that the High Court had previously ruled in similar matters
(like in Precision Tools India) that absence of intent to evade tax
is crucial.
Findings of
the Court
After hearing both sides
and examining the records, the Division Bench delivered a firm and reasoned
judgment, outlining the following key findings:
1. Penalty
Without Tax Evasion Finding Is Unsustainable: The Court noted
that in the impugned penalty order, no observation whatsoever was made
regarding evasion or intent to evade tax. This was held to be a serious
omission.
2. Binding
Precedent – Precision Tools India: The Court referred to
its consistent view in Precision Tools India, which held 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."
3. Violation
of Rule 138 ≠ Evasion: The Court reaffirmed that procedural
infractions—such as the non-filling of e-way bill Part-B—cannot, in the
absence of malafide intent, be treated as a ground for such severe penal
action.
4. No
Justification for Bank Guarantee to Remain in Force:
Since the penalty was unsustainable, the bank guarantee submitted under
protest also lost its legal basis. The Court directed that the bank
guarantee be returned.
Operative
Part of the Judgment
- The writ petition filed by Tata
Hitachi was allowed.
- The order dated 28 April 2025,
passed by the Assistant Commissioner, Sector–5 (Mobile Squad–5), Gautam
Buddha Nagar, was set aside.
- The bank guarantee furnished by
the petitioner towards the penalty amount under protest was ordered to be returned
within two weeks from the date of the judgment.
Legal
Significance of the Judgment
This case contributes to
the evolving jurisprudence under GST laws, especially in the area of enforcement
actions for procedural lapses. The judgment underscores several important
legal principles:
1. Intent Is Crucial for
Penalty Under Section 129
- Penalties under Section 129 are not
to be imposed for minor technical lapses, unless intent to evade
tax is established with supporting findings.
2. Rule 138 Violations
Are Procedural
- The failure to fill Part-B of an
e-way bill, though a violation of Rule 138, is a procedural
error, not a substantive ground for imposing penalties unless tax
evasion is evident.
3. Judicial Consistency
and Predictability
- By reaffirming the position in Precision
Tools India, the Court provided certainty to businesses that
are often harassed over minor documentation issues.
4. Checks on Revenue
Overreach
- The Court sent a clear message that tax
authorities cannot impose penalties mechanically, and must exercise discretion
based on facts and law, ensuring due process is followed.
Conclusion
The Allahabad High
Court’s ruling in Tata Hitachi Construction Machinery Co. Pvt. Ltd. vs.
State of U.P. stands as a protective shield for genuine taxpayers,
especially in transit-related issues under GST.
By emphasizing intent-based
adjudication rather than mechanical penalization, the Court has
helped ensure that the GST regime does not become a tool for unwarranted
revenue collection at the cost of fair business practice.
This judgment is
especially important for logistics-heavy industries like construction
equipment, manufacturing, and FMCG, where goods-in-transit issues are
frequent, and documentation errors can occur without any wrongful intention.
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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