Justice Shekhar B Saraf, while quashing the penalty under Section 129 of the Uttar Pradesh Goods and Service Tax Act, 2017, stated, “In certain instances, it is the petitioner’s responsibility to demonstrate that there was no tax evasion. Yet, if the mistake in documentation is merely clerical or typographical, it is up to the department to prove that there was an intention to evade tax.”

The petitioner’s lawyer argued during the proceedings that the only mistake in the documentation was an incorrect vehicle number on the e-way bill, which was a minor oversight, and there was no deliberate intention to evade tax as proven by the lack of discrepancies in the goods or any other documents.

Granting the writ petition by M/S Indeutsch Industries Private Limited, the court, in its verdict dated February 19, overturned the orders dated June 22, 2019, and June 22, 2018, issued by the GST authorities. The court noted, “Upon reviewing the principles mentioned, it is evident that proving an intention to evade tax is essential before a penalty can be applied. In this case, the department was unable to prove such an intention, and furthermore, the appellate authority did not consider all documents provided by the petitioner to counter the claim of an intention to evade tax.”

Source from: https://www.a2ztaxcorp.com/allahabad-high-court-quashes-gst-penalty-citing-lack-of-tax-evasion-evidence/