Not filling Part-B of an e-way bill is a technical breach, not tax evasion.

Not filling Part-B of an e-way bill is a technical breach, not tax evasion.

Issue

Can goods in transit be detained and a penalty imposed under Section 129 of the CGST Act, 2017, for the sole reason that Part-B of the accompanying e-way bill (which contains the vehicle details) was not filled out, especially when all other essential documents are in order?

Facts

• A consignment of goods was detained by GST officers while it was in transit.
• The only reason given for the detention was that Part-B of the e-way bill had not been filled out.
• It was an undisputed fact that all other necessary and primary documents, including the tax invoice, the L.R. (Lorry Receipt / Consignment Note), and Part-A of the e-way bill, were present and were accompanying the goods.
• The assessee argued that this was a mere technical breach of the rules and did not indicate any intention to evade tax. A penalty was nevertheless imposed, which the assessee deposited under protest to get the goods released.

Decision

The High Court ruled decisively in favour of the assessee.

• It held that since all the essential documents required for the transport were available and there was no other discrepancy, the failure to fill out Part-B of the e-way bill could only be considered a minor, technical breach.
• The court found that no adverse inference of an intent to evade tax could be drawn from this minor lapse, which is the primary condition for invoking the harsh provisions of Section 129.
• The detention and penalty order was quashed. The court further directed the department to refund the entire penalty amount that the assessee had deposited under protest.

Key Takeways

1. A Distinction is Made Between Major and Minor Errors: The courts consistently draw a clear line between major violations (like transporting goods with no invoice or e-way bill at all) and minor, technical breaches (like a mistake in the vehicle number or, in this case, not filling Part-B). The latter generally does not warrant a heavy penalty under Section 129.
2. The “Intent to Evade Tax” is the Litmus Test: The purpose of the provisions for detention and seizure of goods is to catch and penalize actual tax evasion. If the documents that are available on hand are sufficient to prove that there is no such fraudulent intent, a minor procedural error should not be penalized.
3. The “Full Document” Check is a Strong Defense: When the tax invoice, L.R., and Part-A of the e-way bill are all present and their details match the goods being transported, it creates a very strong case that the transaction is genuine and that there is no intention to evade tax.
4. The Penalty Must be Proportional to the Offense: Imposing a heavy penalty for a minor, easily curable, and non-revenue-implicating error is considered to be disproportionate by the courts and is often struck down as being arbitrary and unjust.