GST: Failure to generate e-way bill on time without having any poyential financial implications is a mere technical errors & should not be a ground for imposition of penalties.

 

Allahabad High court recently has held that i𝐧𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐭𝐨 𝐞𝐯𝐚𝐝𝐞 𝐭𝐚𝐱 𝐢𝐬 𝐚 𝐦𝐮𝐬𝐭 𝐚𝐧𝐝 𝐭𝐨 𝐛𝐞 𝐩𝐫𝐨𝐯𝐞𝐝 𝐛𝐲 𝐝𝐞𝐩𝐚𝐫𝐭𝐦𝐞𝐧𝐭. 𝐅𝐚𝐢𝐥𝐮𝐫𝐞 𝐭𝐨 𝐠𝐞𝐧𝐞𝐫𝐚𝐭𝐞 𝐞-𝐰𝐚𝐲 𝐛𝐢𝐥𝐥 𝐨𝐧 𝐭𝐢𝐦𝐞 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐡𝐚𝐯𝐢𝐧𝐠 𝐚𝐧𝐲 𝐩𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐢𝐦𝐩𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬 is a m𝐞𝐫𝐞 𝐭𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥 𝐞𝐫𝐫𝐨𝐫𝐬 &  𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐚 𝐠𝐫𝐨𝐮𝐧𝐝 𝐟𝐨𝐫 𝐢𝐦𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐩𝐞𝐧𝐚𝐥𝐭𝐢𝐞𝐬

The key observations were as under:

1. Only technical errors under tax laws without any financial implications must not be the foundation for the imposition of penalties

2. Mere technical errors, without having any potential financial implications, should not be the grounds for the imposition of penalties. The underlying philosophy is to maintain a fair and just tax system, where penalties are proportionate to the gravity of the offense. In taxation, the imposition of penalty serves as a critical measure to ensure compliance with tax laws and regulations.

3. The Court sees that there was no tax evasion intent on the part of the applicant since all details with a vehicle transporting information of the goods were mentioned in the tax invoices carrying the goods.

4. The department had erred in holding that intent to evade the tax was a critical element under the Uttar Pradesh Value Added Tax Act, 2008 but was done away with under GST laws, the court ruled.

5. As per the court, establishing the tax evasion intention of the paramount acknowledgment in the tax regime to keep its virtue

6. Case Reference: M/S Falguni Steels v. State Of U.P. And Others WRIT TAX No. – 146 of 2023 (Allahabad HC) Neutral Citation No. – 2024:AHC:11990