Penalty to Be Imposed Only in Cases of Intentional Tax Evasion, Not on Inadvertent Errors | Allahabad HC

Case Detail: Indeutsch Industries (P.) Ltd. v. State of U.P - [2024] 160 taxmann.com 733 (Allahabad)

Judiciary and Counsel Details

• Shekhar B. Saraf, J.
• Nishant Mishra for the Petitioner. 
• C.S.C. for the Respondent.

Facts of the Case

The petitioner was engaged in manufacturing artist brush and its materials. It sold goods to its customer and engaged a transporter for transportation of goods. Due to unavailability of initially designated vehicle, the transporter utilized alternative vehicle for transportation which resulted in discrepancy in e-way bill generated.

The goods were detained by the department and penalty was levied under Section 129(3). It filed appeal against the detention of goods but the appeal was rejected. Thereafter, it filed writ petition against the order of detention.

High Court Held

The Honorable High Court noted that the goods were intercepted shortly after leaving SEZ unit and customs duty and IGST had been duly paid. The Court further noted that the intention to evade tax is sine qua non before imposition of penalty and the burden of proof lies on the petitioner to show no tax evasion.

However, in the present case, the Revenue failed to establish any such intention since discrepancy in e-way bill was merely a typographical error and there was no other evidence to establish tax evasion. Therefore, it was held that the penalty levied on the petitioner would be against the principles of natural justice and the impugned order was liable to be quashed and set aside.