Sachin Jain Vs State of U.P. Thru. Prin. Secy. State Taxes Lko. and 3 Others

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HIGH COURT OF JUDICATURE AT ALLAHABAD LUCKNOW

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WRIT TAX No. - 229 of 2024

Sachin Jain

.....Petitioner(s)

Versus

State of U.P. Thru. Prin. Secy. State Taxes Lko. and 3 others .....Respondent(s) Counsel for Petitioner(s) : Mudit Agarwal, Kazim Ibrahim Counsel for Respondent(s) : C.S.C.

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Court No. - 6

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HON'BLE JASPREET SINGH, J.

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Heard Shri Mudit Agarwal, learned counsel for the petitioner and Shri Sanjay Sarin, learned Additional Chief Standing Counsel for the StateRevenue.

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Under challenge is the order dated 30.08.2024, passed by the Additional Commissioner, Grade-II (Appeals-2), State Tax, Bareilly, U.P., whereby the appeal preferred by the petitioner was dismissed, as a consequence, the order dated 09.08.2024, passed by the Assistant Commissioner, Sector-I (Mobile Squad), Badaun, U.P., in GST MOV-9, under Section 129(3) of the U.P. Goods and Services Act, 2017 (in short, 'the GST Act') has been affirmed, which has the impact of imposing a penalty of Rs.24,88,320/- on the petitioner.

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The submission of the learned counsel for the petitioner is that the petitioner had received a purchase order from M/s. Radial Natural Aeromatics Pvt. Ltd., Badaun, who is a registered dealer under the provisions of the GST Act. In furtherance of the aforesaid purchase order relating to supply of Mentha Oil, the petitioner prepared e-invoice bearing Invoice No.FTP/187, dated 01.08.2024 for Rs.1,16,12,160/-. The petitioner also generated e-way bill No.461465527617. The petitioner also generated Form 9R under the provisions of Mandi Adhiniyam at Barabanki Mandi and in furtherance thereof a Mandi Gate Pass was also issued to the petitioner.

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WTAX No. 229 of 2024

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The goods were dispatched from Barabanki to Badaun on 01.08.2024 and it also reached the outskirts of District Badaun on 02.08.2024.

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The case of the petitioner is that during the auspicious month of 'Shravan', which fell in the month of August, 2024, a large number of devotees undertake a 'Kanwar Yatra'. In order to ensure and provide an accident free passage for such devotees, the District Administration placed certain traffic restrictions. It is in the aforesaid background that the District Administration of Badaun had restricted the entry of heavy vehicles in the city. For the aforesaid reason, the truck, which was carrying the goods of the petitioner for being supplied to the dealer in District Badaun was not permitted to enter into the city and it remained packed outside the city limits from 02.08.2024 to 05.08.2024.

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Once the traffic restrictions eased, the trucks were permitted and entered the City of Badaun and while it was on the way to Ujhani in District Badaun which is the place of business of the purchaser, the truck in question was intercepted by the Mobile Squad and detained on 05.08.2024 at 11:49 AM.

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The Mobile Squad inspected the vehicle and all the documents pertaining to the transaction and it were found to be in order and there was no discrepancy noticed in the quality, quantity, value or nature of the goods. The only discrepancy which emerged was the fact that e-way bill which was generated on 01.08.2024 had expired on 03.08.2024 and the same was not renewed.

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It is in the aforesaid backdrop that the Mobile Squad initiated proceedings and the allegations against the petitioner was that its e-way bill had expired and the petitioner had not renewed the same nor generated a fresh e-way bill.

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In furtherance thereof, the petitioner was served with a show cause notice, which was duly replied by the petitioner in detail stating all the facts and annexing all the relevant documents, however, the response of the petitioner did not find favour with the authorities and by means of the order dated 09.08.2024, a penalty was imposed for a sum of Rs.24,88,320/-.

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WTAX No. 229 of 2024

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The order dated 09.08.2024 was challenged in an appeal under Section 107 of the GST Act which also came to be dismissed which led the petitioner to approach this Court by means of the instant petition.

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The crux of the submission of the learned counsel for the petitioner is that insofar as the facts are concerned, there is hardly any dispute between the parties. It is also stated that the reply which was given by the petitioner in response to the show cause notice was also not found to be incorrect. It was also not disputed that the goods which were being transported had all the documents pertaining to the said transactions and even there was no discrepancy noticed relating to the transactions vis-avis the books of account of the petitioner.

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Since, the entire movement of the goods were already known to the GST Department as the e-way bill and the invoices had been generated and in respect thereto there was no dispute regarding the fact that there was a restrictions in the traffic movement coupled with the fact that there was no dispute with respect to the fact that there was no difference in the quality, nature or value of the goods, hence, in such circumstances, there was no material available with the authorities to form any subjective satisfaction that the petitioner ever intended to evade the tax.

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It is urged that in order to impose the penalty, there must be some material with the authorities based upon which it forms a satisfaction that there was any intent to evade the tax. In absence of any intention or material, the penalty could not have been imposed. In the aforesaid circumstances, it is urged that the impugned orders are bad in the eyes of law.

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Shri Agarwal, learned counsel for the petitioner, in support of his submissions has relied upon a decision of the Apex Court in Assistant Commissioner (ST) and others v. Satyam Shivam Papers Private Limited, (2022) 14 SCC 157 . He has also relied upon a decision of a Coordinate Bench of this Court in M/s. Globe Panel Industries India Pvt. Ltd. v. State of U.P. and others, 2024 SCC OnLine All 229 .

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Shri Sarin, learned Additional Chief Standing Counsel for the StateRevenue did not dispute the facts, however, what has been submitted by

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WTAX No. 229 of 2024

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the respondents is that e-way bill is issued for a limited time depending on the distance. It is submitted that upto 200 kilometers, the validity of the e- way bill is one day, whereas for every 200 kilometers or part thereof, another additional day is provided.

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It is urged that in the instant case, the e-way bill was generated on 01.08.2024 and it was valid till 03.08.2024. It is, thus, urged that admittedly when the inspection was made on 05.08.2024, the e-way bill had expired and the same is in clear violation of the Rules.

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It is further urged that the petitioner did not make any attempt to either renew the e-way bill as it would have been done for a period upto eight hours or it could have generated a fresh e-way bill. In absence thereof, it was apparent that the petitioner did not comply with the provisions of the GST Act, hence, the authorities were justified in imposing the penalty.

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The submission made by the petitioner was also considered by the Appellate Authority, who has dismissed the same and in the given facts and circumstances, the instant petition also deserves the same fate and is liable to be dismissed.

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The Court has heard learned counsel for the parties and also perused the material on record.

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As already noticed above, there is no dispute between the parties regarding the facts of the case. It is an admitted case that the e-way bill was generated on 01.08.2024. The invoice relating to supply of Mantha Oil was also made available and even during the inspection carried out by the Mobile Squad on 05.08.2024, the goods were found available with necessary documents and invoices.

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It is also the case of the respondents-authorities that there was no discrepancy or difference regarding quality, quantity, value of the goods vis-a-vis the documents relating thereto and as noticed during inspection. It is also not disputed that a show cause notice was issued and in response thereto, the petitioner had filed a detailed reply indicating its stand including the traffic diversion and restrictions. It is also not disputed that

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apart from the fact that the e-way bill had expired other than that there was no other discrepancy noticed.

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In the aforesaid circumstances and undisputed facts, whether the respondent were justified in imposing penalty and what was the material available before the authorities to led them to impose a penalty and that too without recording any satisfaction that there was any intent of the petitioner to evade the tax.

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In this regard, the decision of the Apex Court in Satyam Shivam Papers Private Limited (supra), wherein, it has made observations in Paragraphs 2, 4, 5 to 10 which clearly indicates that in order to impose a penalty, it must be demonstrated that there has been any intent to evade the tax on the part of the assesses.

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In the present case, the respondents could not point out any such material upon which the authorities could form a satisfaction that the petitioner intended to evade the tax. This aspect has also been considered by a Coordinate Bench of this Court in M/s. Globe Panel Industries India Pvt. Ltd. (supra) wherein in Paragraph 4, this Court has held as under:-

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"4. This Court in M/s Hindustan Herbal Cosmetics v. State of U.P. and Others (Writ Tax No.1400 of 2019 decided on January 2, 2024) and M/s Falguni Steels v. State of U.P. and Others (Writ Tax No.146 of 2023 decided on January 25, 2024) held that mens rea to evade tax is essential for imposition of penalty. The factual aspect in the present case did not indicate any intention whasoever to evade tax. Furthermore, the documents that have been relied upon by the petitioner have not been considered by the authorities. The authorities have dealt with the issue with regard to the expiry of the E-Way Bill and held that no explanaiton was offerred by the petitioner with regard to the fresh generation of the E- Way Bill, as the same had expired ten days before the detention. However, it is to be noted that the goods in the vehicle were for two e- Invoices and two E-Way Bills and only one E-Way Bill had expired. There is no dispute with regard to the consignor and consignee nor any dispute with regard to the description of the goods in the vehicle. In relation to the e-Invoices and the E-Way Bills, the authorities have not been able indicate any intention whatsoever on behalf of the petitioner to

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evade tax. Indubitably, there is a technical violation that has been committed by the petitioner. However, the authorities have not been able to indicate in any manner that the E-Way Bill had been used repeatedly nor have they made out any case with regard to an intention to evade tax by the petitioner. Accordingly, this Court is of the view that such a technical violation by itself without any intention to evade tax cannot lead to imposition of penalty under Section 129(3) of the Act. This view is fortified by a catena of judgments as indicated above."

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Reference has also been made to another decision of this Court in M/s. Akhilesh Traders v. State of U.P. and 3 others, 2024 SCC OnLine All 2390 , wherein it was held that without arriving at a satisfaction regarding intent to evade tax by the assessee, the penalty cannot be imposed.

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Learned Additional Chief Standing Counsel could not dispute the fact that there was no material regarding the intent of evade of tax and it also could not dispute that this issue has been clearly dealt with by this Court in M/s. Akhilesh Traders (supra) and M/s. Globe Panel Industries India Pvt. Ltd. (supra).

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In view of the aforesaid as well as the law noticed above, this Court is of the clear view that the impugned orders dated 30.08.2024 and 09.08.2024 cannot be sustained and are accordingly set aside.

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A writ in the nature of certiorari is issued quashing the order 30.08.2024, passed by the Additional Commissioner, Grade-II (Appeals2), State Tax, Bareilly, U.P., and the order dated 09.08.2024, passed by the Assistant Commissioner, Sector-I (Mobile Squad), Badaun, U.P.

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With the aforesaid, the petition is allowed . In the facts and circumstances, there shall be no order as to costs.

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(Jaspreet Singh,J.)

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November 12, 2025

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Rakesh/-

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Digitally signed by :- RAKESH PRAJAPAT High Court of Judicature at Allahabad, Lucknow Bench

Sachin Jain v. State of U.P. Thru. Prin. Secy. State Taxes Lko. and 3 Others

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Sachin Jain v. State of U.P. Thru. Prin. Secy. State Taxes Lko. and 3 Others

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