Penalty for goods detention due to PIN code error with correct address unjustified: HC
Issue
Whether the detention of goods and imposition of penalty under Section 129 of the GST Act is justified when there is a minor one-digit error in the PIN code on the invoice/e-way bill, while the consignee’s address and other documents are correct.
Facts
The Transaction: Goods were being transported accompanied by all requisite documents, including a valid tax invoice, e-way bill, and railway receipt.
The Error: The tax invoice contained a one-digit error in the PIN code of the consignee. However, the full address mentioned was correct.
No Other Discrepancy: There was no mismatch in the description of goods, value, or tax paid. The identity of the consignor and consignee was established without ambiguity.
Department’s Action: Despite the minor nature of the error, the authorities detained the goods and imposed a penalty under Section 129, treating the error as a substantial violation indicative of tax evasion.
Decision
Minor Discrepancy: The Allahabad High Court held that a one-digit error in the PIN code, when the address is otherwise correct, is a minor defect and cannot be equated with an intent to evade tax.
Circular Protection: The Court relied on CBIC Circular No. 64/38/2018-GST (Clause 5(b)), which explicitly states that proceedings under Section 129 should not be initiated for minor discrepancies like PIN code mismatches if the address is correct.
Binding Nature: The authorities failed to follow the binding circular which was issued to prevent harassment on technical grounds.
Ruling: The seizure of goods and the imposition of penalty were held to be contrary to GST law and the circular. The penalty order was quashed, and the writ petition was allowed.
Key Takeaways
Circular 64/38/2018 is a Shield: This Circular is the primary defense against penalties for clerical errors. It lists specific “minor discrepancies” (spelling mistakes, PIN code errors, vehicle number digits) for which no detention should occur—only a nominal penalty of Rs. 1000 (Rs. 500 CGST + Rs. 500 SGST) under Section 125 may be levied, but goods must be released.
Intent Matters: For Section 129 penalties to stick, there must usually be a substantive error indicating an intent to evade tax (like quantity mismatch). Purely clerical slips in the presence of valid documents do not justify seizure.