Clarification: Typographical Errors in E-Way Bills Not Grounds for Penalty Imposition
In a significant ruling, the Allahabad High Court addressed penalties for typo or clerical errors in e-way bills in the case of Hawkins Cookers Ltd. v. State of UP [Writ Tax No. 739 of 2020 dated February 12, 2024]. Here’s a breakdown of the case and its implications:
Facts:
- Hawkins Cookers Ltd (“the Petitioner”) makes pressure cookers under the Hawkins brand.
- The Petitioner bought materials from outside Uttar Pradesh for making pressure cookers at their UP factory.
- Among 8 e-way bills issued, only four had the correct place of supply mentioned.
- The Revenue Department (“the Respondent”) imposed penalties through orders dated February 14, 2020, and October 13, 2020 (“the Impugned Orders”).
Issue:
- Is a typo or clerical error in e-way bills a reason to impose penalties?
Court’s Decision:
- The Allahabad High Court considered Section 129 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
- The court stressed that penalties require evidence of intent to evade tax.
- When rules aren’t followed, the Department may presume intent to evade tax.
- However, if documents required for the goods are provided, the presumption of evasion can be challenged.
- Typo or clerical errors in e-way bills, when most documents are provided, don’t imply intent to evade tax.
- The court emphasized that technical errors shouldn’t result in harsh penalties.
- The penalties in this case lacked legal basis, so the court quashed the Impugned Orders.
Conclusion:
The Allahabad High Court’s decision clarified that typo or clerical errors in e-way bills shouldn’t lead to penalties, especially when there’s no intent to evade tax. The ruling sets a precedent for fair treatment of businesses, stressing the need for balanced penalty enforcement.
This judgment highlights the importance of proper documentation and the fair application of penalties in tax-related matters. It ensures that businesses aren’t unduly punished for minor errors, promoting a more equitable tax system.
By recognizing the practical challenges businesses face in compliance, the court’s decision promotes confidence and fairness in tax administration, benefiting both businesses and the government alike.
