• Dated 16^th June, 2025

Allahabad High Court held that Non-Filling of Part-B of E-Way Bill Not Sufficient to Attract Penalty Under Section 129 Without Tax Evasion: Allahabad High Court

Allahabad High Court held that Non-Filling of Part-B of E-Way Bill Not Sufficient to Attract Penalty Under Section 129 Without Tax Evasion: Allahabad High Court

Brief Facts

The petitioner, FISERV Merchant Solutions Pvt. Ltd. was transporting goods through Ghaziabad when the vehicle was intercepted at the U.P. Gate. While an e-way bill was present, it was discovered that Part-B of the e-way bill, which contains transportation details like the vehicle number, was left blank. Based on this omission, the Tax Authorities issued a notice and imposed a penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax (UPGST) Act, 2017, citing a violation of Rule 138 of the CGST Rules. The petitioner filed a Writ petition before the High Court challenging the penalty order, contending that there was no intention to evade tax.

Petitioner's Contention

The petitioner contended that the failure to fill Part-B of the e-way bill was a mere technical error and not an act of tax evasion. Their legal counsel emphasized that no finding or evidence was recorded by the tax officer to indicate any attempt to evade tax. Citing previous rulings, particularly the decision in Precision Tools India v. State of U.P., the petitioner argued that penalty under Section 129 should only apply when there is a clear intention to evade tax, and not for minor procedural lapses.

Respondent's Contention

The State of U.P., defending the penalty, argued that the transportation of goods without a properly filled e-way bill violated the GST Rules, particularly Rule 138, and such a breach was enough to justify the imposition of penalty under Section 129 of the UPGST Act. Although the respondent did not deny the consistent view taken by the Courts in earlier cases, it was submitted that the absence of Part-B was undisputed and should not be overlooked merely as a technical fault.

Court's Decision

The High Court examined the facts and noted that the only basis for the penalty was the non-filling of Part-B of the e-way bill, and there was no recorded finding or evidence showing an intention to evade tax. Referring to prior decisions, including Precision Tools India, the Court reiterated that mere procedural lapses cannot lead to penal action under Section 129 unless there is an attempt to evade tax and such intention is clearly established. Accordingly, the penalty order dated 20.01.2025 passed by the State Tax Officer was set aside. The Court also directed that since the petitioner had deposited the penalty under protest, the amount must be refunded within three weeks.

BTA Remarks

This judgment reaffirms the principle that GST penalties should not be imposed for minor technical violations in documentation unless accompanied by a clear intent to evade tax. The decision protects businesses from undue harassment for procedural errors and emphasizes the importance of a fair assessment process before imposing severe penalties. It reinforces that compliance failures must be distinguished from deliberate tax evasion, ensuring that the penal provisions under GST law are applied justly and proportionately.

Case reference: Fiserv Merchant Solutions Pvt. Ltd. Vs State of UP (2025) 30 Centax 318 (All.)

Author: Soumaditya Chakroborty

Edited by: Shaily Gupta