The Supreme Court has issued notice in a Special Leave Petition (SLP) challenging a Madhya Pradesh High Court judgment that remanded a GST penalty dispute for reconsideration on the issue of whether there was any malafide intention to evade tax behind an incorrect destination mentioned in an e-way bill. 

The bench of Justice B.V. Nagarathna and Justice R. Mahadevan condoned the delay in filing the petition and permitted service of notice on the State’s standing counsel. While condoning the delay, the bench issued notice to the respondents, thereby agreeing to examine the legal issues arising from the High Court’s decision. 

The dispute arose after a consignment of GST-paid goods being transported by the company was intercepted by the State Tax authorities. According to the authorities, although the goods were actually being transported to the company’s office at Jabalpur, the e-way bill reflected Indore as the destination. Treating this discrepancy as a violation under Section 68 read with Section 129 of the Central Goods and Services Tax (CGST) Act, the State Tax Officer imposed both tax and penalty. The company’s appeal against the demand was also rejected by the appellate authority. 

Buy Now: Service Tax Judgement E-Compilation : June 2026

Before the Madhya Pradesh High Court, the company contended that the incorrect destination was merely a clerical and inadvertent error. It argued that while generating the e-way bill, the registered office address at Indore appeared as the default address on the online portal and could not be manually modified, resulting in the destination being incorrectly reflected despite the goods actually being intended for Jabalpur. The petitioner relied upon earlier High Court decisions granting relief in cases involving minor errors in e-way bills. 

The State opposed the petition by relying upon the CBIC Circular dated 14 September 2018, which identifies certain minor mistakes in e-way bills that may not warrant detention or penalty proceedings under Section 129.

According to the department, the case did not qualify for protection under the circular because it involved not merely a typographical mistake but an incorrect consignee address along with incorrect locality details. The authorities further argued that the possibility of tax evasion could not be ruled out and that the petitioner was therefore not entitled to immunity under the circular. 

The Madhya Pradesh High Court observed that although the petitioner might not strictly fall within the protective ambit of the CBIC circular, Section 129 is a penal provision, and therefore the presence or absence of an intention to evade tax assumes significance.

The Court held that before sustaining a penalty, the authorities ought to examine whether the incorrect address resulted from a genuine inadvertent mistake or whether it reflected a deliberate attempt to evade tax. Such an inquiry, the Court observed, had not been undertaken either by the adjudicating authority or by the appellate authority. 

The High Court distinguished earlier rulings relied upon by the petitioner, including Robbins Tunnelling and Trenchless Technology (India) Pvt. Ltd., M/s Create Consults, and Technosteel Infraprojects Pvt. Ltd. It noted that those cases involved minor mistakes where the consignee’s address and other particulars remained substantially correct, enabling the assessees to claim the benefit of the CBIC circular.

In contrast, the present case involved incorrect address details as well, making the factual situation materially different. 

Instead of affirming the penalty, the High Court quashed the appellate order and remanded the matter to the appellate authority with a direction to reconsider the appeal solely on the issue of whether the company had any malafide intention to evade tax. The appellate authority was directed to complete the exercise within three months. 

Aggrieved by the High Court’s judgment, the company approached the Supreme Court through a Special Leave Petition. The apex court has now issued notice after condoning the delay in filing the petition, indicating that it will examine the controversy surrounding the applicability of Section 129 in cases involving discrepancies in e-way bills and the relevance of establishing an intention to evade tax before imposing penalty. 

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: 20.76 Kg Hydroponic Weed Seized at Delhi IGI Airport; Bangkok Passenger Arrested Under NDPS Act