The Uttarakhand High Court has ruled that a mere human or typographical error in the details of an e-way bill, without any intention to evade tax or cause revenue loss, cannot justify the invocation of detention and penalty provisions under Section 129 of the Central Goods and Services Tax (CGST) Act, 2017.
The bench of Chief Justice Manoj Kumar Gupta and Justice Subhash Upadhyay quashed a penalty of ₹10.67 lakh, holding that the mistake fell within the category of minor errors contemplated under the CBIC Circular dated September 14, 2018.
The petitioner has challenged an order dated September 10, 2023, through which the State Tax Officer imposed a penalty of ₹10,67,450 under Section 129 of the CGST/SGST Act, read with Section 20 of the Integrated Goods and Services Tax (IGST) Act.
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The dispute arose after GST authorities intercepted a vehicle transporting aluminium roofing sheets near Rudrapur, Uttarakhand, on September 9, 2023. During inspection, the driver produced two tax invoices and the corresponding e-way bills. However, the authorities noticed a discrepancy in the invoice particulars. Instead of mentioning the complete invoice numbers as “32/(23-24)” and “33/(23-24),” the invoices referred only to “32” and “33,” leading the department to conclude that there was a mismatch between the invoices and the e-way bills.
Rohit Arora, the counsel on behalf of the petitioner argued that the discrepancy was nothing more than an inadvertent clerical mistake. Reliance was placed on the CBIC Circular dated September 14, 2018, which specifically provides that where transportation documents contain minor mistakes or typographical errors, authorities should not invoke the harsh provisions of Section 129. Instead, only a nominal penalty of ₹500 each under Section 125 of the CGST Act and the corresponding State GST Act is envisaged.
Mr. Arora further relied upon the Uttarakhand High Court’s earlier decision in M/s Sonal Automation Industries v. State of Uttarakhand, where the Court had held that minor discrepancies in e-way bill particulars, absent any intention to evade tax, cannot attract detention proceedings under Section 129.
The court examined the documents placed on record along with the petitioner’s explanation submitted in response to the show-cause notice.
The Court observed that the discrepancy was purely a human error. Importantly, the Revenue was unable to demonstrate that the petitioner had derived any benefit from the mistake or had attempted to evade payment of GST.
The Bench also noted that the department itself admitted in its counter-affidavit that the goods found during interception fully matched the declarations contained in the e-way bills and accompanying transport documents. Thus, there was no allegation of excess goods, undeclared goods, or any discrepancy affecting the tax liability.
Reaffirming its earlier judgment in Sonal Automation Industries, the Court emphasized that the CBIC Circular recognizes that genuine clerical mistakes may occur while preparing transport documents. Such minor errors should be viewed pragmatically and should not automatically invite detention and confiscatory proceedings under Section 129.
The Court reiterated that where all other particulars correctly correspond with the tax invoice and e-way bill, and there is no evidence of any deliberate attempt to mislead the tax authorities or evade tax, invoking Section 129 would be legally unsustainable.
Holding that the case squarely fell within the protection provided by the CBIC Circular, the High Court set aside the impugned penalty order.
The Court directed the State authorities to refund the amount deposited by the petitioner, after deducting only the nominal penalty payable under Clause 5 of the CBIC Circular dated September 14, 2018, applicable to minor documentation errors.
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