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No penalty can be levied for minor errors in e-Way bill when taxes have been paid correctly, rules Kerala HC

Shishir Sinha New Delhi | Updated on December 18, 2018

In what could be seen as a big relief for businesses, a High Court ruling has made it clear that no penalty can be levied if wrong value of goods are entered in e-Way bills, provided the amount paid as tax is correct.

Since the High Court order has precedent value, it means such a ruling can be applied for any matter where goods are detained on account of small mistake in e-Way bill — like a zero missing from the value of goods even when tax has been paid correctly.

The matter here involves the consignment, along with the vehicle, detained because of a mistake in the value of goods even though taxes were paid on the correct account. The petitioner, Greater Noida-based Rai Prexim India Private Ltd, moved the Kerala High Court seeking relief as it’s goods were detained on account of discrepancy in the e-Way bill.

The first e-Way bill, generated by the petitioner, mentioned the place of delivery as ‘Payhanamthitta, Kerala - 686547’. The value of the goods was shown as ₹38,82,200. Noting that the place of delivery mentioned was a mistake, the e-Way bill was cancelled and the petitioner generated another e-Way bill, that showed the correct name ‘Pathanamthitta’. However, the value of the goods was given as ₹38,8,220 instead of ₹38,82,200. Taking exception to this e-Way bill, tax authorities detained the goods in Kerala.

“If a human error which can be seen by naked eyes is detected, such errors cannot be capitalised for penalisation,” the court said in its ruling. It also said the court can only order release of the vehicle and goods as against bank guarantee. However, adopting a different course, it said that if the petitioner had paid the I-GST (Integrated Goods & Services Tax) in accordance with the value as shown in the original bill, goods cannot be detained and shall be released to the petitioner.

Further it said that, on verification, if it is found that the petitioner had paid the I-GST in accordance with the value shown in first e-Way bill, the vehicle and the goods shall be released on executing a simple bond. However, if it is found that the that IGST has not been paid according to the value shown in the first e-Way bill, detained goods and vehicle need be released only on furnishing bank guarantee.

The e-Way bill system for inter-State trade was introduced on April 1, while that for intra-State was rolled out in phases. It is a document required to be carried by the person in charge of a consignment of goods with value exceeding ₹50,000, and is generated from the GST Common Portal. The consignor or consignee, as a registered person or a transporter of the goods, can generate the e-Way bill. The validity of the e-Way bill depends on the distance the goods have to be transported.

Commenting on the case, Anita Rastogi, Indirect Tax Partner at PwC, said such issues should be dealt with practically at the lower level itself rather than businesses forced to go to the High Court to get justice. “In other words, typing mistakes on e-Way bill where actually full and correct tax has been paid should not lead to detention of goods along with levy of penalty by the officers. The Government should issue clear instructions on this to the Tax Department so that businesses are not troubled for minor silly mistakes,” she said.

Published on December 18, 2018

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