In the absence of intention to evade tax, penalty order under section 129(3) is liable to be quashed

In a recent judgment, the Allahabad High Court clarified the application of penalties under Section 129(3) of the Uttar Pradesh Goods and Services Act, 2017. Let’s dive into the details:

Let us have a short overview of the case:

Case Summary is as under:
– Case Name : Prahlad Rai Vijay Kumar Vs. State of U.P. and 2 Others (Writ Tax No. 587 of 2022)
– Date of Judgment/Order : 16th May 2024
– Issue : The petitioner faced a penalty under Section 129(3) due to an expired e-way bill.

Facts of the Case:
– The petitioner, a taxable person, issued a tax invoice and an e-way bill for a supply.
– The vehicle carrying the goods was intercepted for verification.
– The e-way bill had expired, but the delay was due to a vehicle breakdown.

Court’s Rationale:
– The court emphasized that mens rea (intent to evade tax) is essential for imposing a penalty.
– Previous judgments supported this view.
– The factual matrix showed no intention to evade tax.
– The e-way bill’s technical breach alone couldn’t justify the penalty.

To Summarise,
– Tax compliance matters, but intent matters too.
– Businesses should focus on adherence while considering practical challenges.

The copy of the order is as under:

 

Prahlad Rai Vijay Kumar Vs State of U.P. And 2 Others Allahabad High Court (1)