Penalty for missing E-way Bill Part-B quashed due to technical glitch and no evasion intent

Penalty for missing E-way Bill Part-B quashed due to technical glitch and no evasion intent

Issue

Whether the imposition of penalty under Section 129 for the non-generation of Part-B of the E-way Bill is valid when the omission was caused by a technical glitch and there was no intention to evade tax.

Facts

• Petitioner’s Profile: The petitioner is a GST-registered manufacturer of railway machinery parts.

• Interception: Goods and conveyance were intercepted and seized in transit.

• Grounds for Detention: The sole allegation was the non-updation/non-generation of Part-B of the E-way Bill.

• Defense: The petitioner submitted that all accompanying documents were in order. They asserted that Part-B could not be filled due to a genuine technical glitch.

• Procedural History: Despite these submissions, the authorities initiated proceedings and imposed a penalty, which was subsequently affirmed by the Appellate Authority.

Decision

• Technical Error Accepted: The Court observed from the record that the technical glitch preventing the filling of Part-B was undisputed.

• Absence of Evasion Intent: The authorities failed to record any finding that there was an intention to evade tax (mens rea) on the part of the petitioner.

• Penalty Unsustainable: The Court held that in the absence of an intent to evade tax and given the established technical error, the levy of penalty was legally unsustainable.

• Orders Quashed: The impugned penalty orders were quashed, and the writ petition was allowed in favour of the assessee.

Key Takeaways

Technical Glitches as Defense: A genuine technical failure to update Part-B of an E-way Bill is a valid ground to challenge penalties, provided the underlying transaction is genuine.

Mens Rea is Crucial: For detention and penalty under Section 129, mere procedural lapses (like a missing Part-B) are insufficient to sustain a penalty if the Revenue cannot prove an intention to evade tax.

Documentation Integrity: If the invoice and Part-A of the E-way Bill are correct, a missing Part-B is often viewed as a venial breach rather than fraud.