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SGST High Court Cases

GST – Penalty under Sections 129 and 130 of the CGST Act, 2017, Non-production of e-Way Bill, Mens Rea – Petitioner transporting goods was intercepted by the authorities as the driver could not produce an e-way bill. The authorities imposed a tax and penalty under Sections 129 and 130 of the CGST Act - Whether the imposition of penalty under Sections 129 and 130 of the CGST Act was justified in the absence of any intention to evade tax by the petitioner – HELD - For invoking the proceedings under Section 129(3) of the CGST Act, Section 130 thereof is required to be read together where the intent to evade payment of tax is mandatory while issuing notice or while passing the order of detention, seizure or demand of penalty or tax, as the case may be. Meaning thereby that intention to evade tax for the imposition of penalty is sine qua non before imposing penalty - The presence of mens rea (intent to evade tax) is a sine qua non for the imposition of penalty under Sections 129 and 130 of the CGST Act – Mere technical errors, without having any potential financial implications, should not have been made the grounds for imposition of penalties, for penalties to be justly imposed, there must be a demonstrated actual intent to evade tax - The Supreme Court in the case of CST vs. Satyam Shivam Papers (P) Ltd, emphasized that penalty cannot be imposed merely for procedural lapses or technical errors without any evidence of intentional tax evasion - In the present case, the tax had already been paid by the petitioner, and there was no intention to evade tax. The mere non-generation of an e-way bill was a technical error, the authorities failed to provide any cogent reasoning or evidence to substantiate the allegation of intentional tax evasion - The imposition of penalty in the absence of mens rea was arbitrary and disproportionate - the impugned orders imposing tax and penalty is quashed and the respondents are directed to release the bank guarantee furnished by the petitioner with applicable interest – The writ petition is allowed
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