Tata Hitachi Constrution Machinery Company Private Limited Vs State of Uttar Pradesh and 2 Others (Allahabad High Court)

In a significant ruling, the Allahabad High Court has reiterated that the mere non-filling of Part-B of an e-way bill, without an accompanying finding of intent to evade tax, does not warrant the imposition of a penalty under Section 129 of the U.P. G.S.T. Act, 2017. This decision provides clarity for businesses on what constitutes a penalty-attracting offense under the GST regime.The case, Tata Hitachi Construction Machinery Company Private Limited Vs. State of Uttar Pradesh and 2 Others, arose from an incident where the petitioner’s goods were intercepted, and it was discovered that while an e-way bill was present, Part-B of the same was not filled. This omission led the Assistant Commissioner, Sector – 5 (Mobile Squad – 5), Gautam Buddha Nagar, Uttar Pradesh, to issue a notice and subsequently impose a penalty of Rs. 2,15,252/- under Section 129(3) of the Act, citing a violation of Rule 138 of the G.S.T. Rules 2017.The petitioner argued that the non-filling of Part-B was a technical breach and that there was no intention to evade tax. Crucially, they contended that the authorities had not recorded any finding regarding tax evasion intent in their order. The petitioner relied on previous judgments of the Allahabad High Court, particularly the decision in M/s Precision Tools India vs. State of U.P. and others, Writ-Tax No. 415 of 2023, decided on January 29, 2024, which established that without an intention to evade tax, the mere technical omission in Part-B of the e-way bill would not trigger Section 129 penalties.The respondents, representing the tax authorities, acknowledged that the lack of a filled Part-B was undisputed but argued that the intention to evade tax might not be relevant in such circumstances. However, they did not dispute the consistent view taken by the High Court in cases like Precision Tools India (supra).Upon reviewing the impugned order, the High Court found that it solely focused on the violation of Rule 138 due to the unfilled Part-B of the e-way bill. The order contained no mention or finding of any attempt to evade tax by the petitioner. Citing its series of consistent rulings on this matter, the High Court concluded that the impugned order could not be sustained.Consequently, the High Court allowed the writ petition, setting aside the penalty order dated April 28, 2025. As the petitioner had submitted a bank guarantee for the penalty amount under protest, the Court directed that the bank guarantee be returned to the petitioner within two weeks from the date of the order. This judgment reinforces the legal position that for a penalty under Section 129 to be attracted, there must be a clear finding of an intent to evade tax, beyond mere procedural lapses.