Case tittle | Varun Beverages Limited VS State of U.P. And 2 Others |
court | Allahabad high court |
Honourable judge | Justice Rohit Ranjan Agarwal,J. |
Citation | 2023 (02) GSTPanacea 281 HC Allahabad WRIT TAX No.-958 Of 2019 |
Judgment date | 02-February-2023 |
The court heard arguments from Sri Shubham Agrawal, counsel for the petitioner, and Sri R.S. Pandey, the Standing Counsel for the State. The petitioner filed this writ petition challenging two specific orders: a penalty order dated June 12, 2018, issued by respondent no. 2, and an appellate order dated July 1, 2019, issued by respondent no. 3.
The petitioner is a registered dealer under the Goods and Service Tax Act, 2017, engaged in the manufacturing and sale of aerated water and fruit juice-based drinks. On June 10, 2018, the petitioner was transferring stock from its unit in Gautam Buddha Nagar, Greater NOIDA, to a sales depot in Kuberpur, Agra. The transfer was being conducted using Truck No. HR-73/6755, and the shipment was accompanied by a delivery challan, e-way bill, and bilty.
However, the mobile squad intercepted and detained the truck and goods on June 10, 2018, because the e-way bill incorrectly listed the vehicle number as UP-13T/6755 instead of HR-73/6755. A detention order was issued on June 11, 2018. Subsequently, a penalty order under Section 129(3) of the GST Act was issued, imposing a tax of Rs. 1,86,834 and an equal amount as penalty, totaling Rs. 3,73,668.
The petitioner then appealed the penalty order under Section 107 of the Act before the Additional Commissioner, Grade-II (Appeal-III) Commercial Tax, Agra.
In this case, the petitioner, a registered dealer under the Goods and Service Tax Act, 2017 (referred to as the “Act of 2017”), challenges two penalty orders: one dated 12.06.2018 issued by the second respondent, and another dated 01.07.2019 issued by the appellate authority, the third respondent. The petitioner is involved in manufacturing and selling aerated water and fruit juice-based drinks. On 10.06.2018, a stock transfer was being made from their unit in Gautam Buddha Nagar, Greater NOIDA, to a sale depot in Kuberpur, Agra. The goods were transported in Truck No. HR-73/6755, accompanied by a delivery challan, e-way bill, and bilty. However, the mobile squad intercepted the truck, detaining both the vehicle and goods because the e-way bill incorrectly listed the vehicle number as UP-13T/6755.
The next day, a detention order was issued, followed by a penalty order on 12.06.2018 under Section 129(3) of the Act of 2017. The penalty included a tax and a penalty amounting to a total of Rs. 3,73,668. The petitioner appealed the penalty order to the Additional Commissioner, Grade-II (Appeal-III) Commercial Tax in Agra, but the appeal was dismissed on 01.07.2019. Consequently, the petitioner filed the current writ petition.
Sri Shubham Agrawal, counsel for the petitioner, argued that the incident involved a stock transfer with all necessary documents, including the e-way bill, properly prepared except for an error in the vehicle number. The wrong entry was a simple mistake, substituting UP-13T for HR-73, with no intent to evade tax. Agrawal cited the Supreme Court case of Assistant Commissioner (ST) vs. M/s. Satyam Shivam Papers Pvt. Ltd. and another, and decisions by the Division Bench of this Court in M/s. Gobind Tobacco Manufacturing Corporation and another vs. State of U.P., and M/s. Ramdev Trading Company and another vs. State of U.P. to support the argument that minor mistakes should not attract such severe penalties.
In contrast, the learned Standing Counsel for the State argued that a 2018 circular by the Commissioner allows minor mistakes (one or two digits) in e-way bills to be overlooked, but the significant discrepancy in this case (the entire vehicle number being incorrect) could not be ignored. Therefore, the explanation provided by the petitioner was not acceptable, justifying the penalties imposed. The registration number on the e-way bill (UP-13T/6755) did not match the actual vehicle in transit (HR-73/6755), which is a substantial error beyond the permissible limits of clerical mistakes.
In the case before the Court, the petitioner, a registered dealer under the Goods and Services Tax Act, 2017, challenges a penalty order dated June 12, 2018, and an appellate order dated July 1, 2019. The petitioner is engaged in manufacturing and selling aerated water and fruit juice drinks and was transferring stock from its unit in Gautam Buddha Nagar to a sale depot in Agra. On June 10, 2018, a mobile squad intercepted the truck (No. HR-73/6755) transporting the goods, due to a discrepancy in the e-way bill which listed the vehicle number incorrectly as UP-13T/6755. Consequently, a detention order was issued on June 11, 2018, followed by a penalty order imposing a tax and penalty totaling Rs. 3,73,668. The dealer’s appeal to the Additional Commissioner, Grade-II (Appeal-III) Commercial Tax, Agra, was dismissed, leading to the current writ petition.
Sri Shubham Agrawal, counsel for the petitioner, argued that the error in the e-way bill was merely a human mistake in entering the vehicle number and not an attempt to evade tax. He referenced several judgments, including the Supreme Court’s decision in Assistant Commissioner (ST) vs. M/s. Satyam Shivam Papers Pvt. Ltd., which emphasizes that minor errors should not attract severe penalties if there is no intent to evade tax. Agrawal contended that all necessary documents accompanied the goods, and the mistake in the vehicle number was insignificant.
Conversely, the State’s counsel argued that the discrepancy in the e-way bill was substantial enough to invalidate the explanation provided by the dealer. According to a 2018 circular by the Commissioner, minor errors in the transporter details could be overlooked, but a complete mismatch in the vehicle registration number could not be ignored. Since the vehicle number in the e-way bill did not match the actual vehicle, the penalty was justified.
Upon reviewing the arguments and evidence, the Court noted that the goods were indeed being transferred as stock and that the only discrepancy was in the vehicle registration number—an error in the state code, not the actual vehicle number. The Court found no evidence of intent to evade tax and considered the error minor. The ruling indicated that such a discrepancy should be covered under the circulars allowing for minor errors and should not result in penalties under Section 129 of the Act. The orders by the detaining and appellate authorities were thus found unsustainable and were set aside. The Department failed to provide any further evidence of tax evasion, reinforcing the decision that the penalty was inappropriate for this minor clerical error.
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