100% GST penalty upheld in Wrong Destination in E-Way Bill: MP HC says it ‘Not Mere Clerical Error' [Read Order]

In a recent decision, the Madhya Pradesh High Court said that putting the wrong destination city in an E-way bill cannot be called a small typing mistake if the goods have gone much further than the mentioned place. In such cases, a full 100% penalty under Section 129 of the Goods and Services Tax Act was correct.

Amara Raja Batteries Limited, the petitioner, filed a writ petition in the High Court against a notice dated 1 March 2019 from the State Tax Officer and an appeal order dated 18 December 2019 from the Joint Commissioner, State Tax. In these, a penalty of Rs. 2,17,305 was imposed, and the petitioner's appeal was rejected.

The petitioner makes lead-acid batteries and is registered under GST. It has offices in Indore and Jabalpur in Madhya Pradesh with the same GST number, and a warehouse in Ahmedabad. On 26 February 2019, the petitioner sent 56 batteries from its Ahmedabad warehouse to its Jabalpur warehouse.

The goods had three invoices and a consignment note. IGST and SGST of Rs. 2,17,305 were paid. But while making the E-way bill, the destination was wrongly written as Indore instead of Jabalpur.

On 1 March 2019, GST officers stopped the vehicle with the goods. They checked and saw that the truck had passed Indore and was near Bhopal, even though the E-way bill said Indore as the end place. They saw this as a breach of Section 129 of the M.P. GST Act. So, they held the goods and vehicle, and let them go only after the petitioner paid a penalty equal to 100% of the tax. The petitioner paid it under protest and then appealed but the appeal was turned down.

The petitioner's lawyer stated that the incorrect destination on the E-way bill was an honest typing error by a worker, and there was no intention to evade tax, as the full tax had already been paid. They said this case fits under a CBICcircular dated 14 September 2018, which says no action under Section 129 for small mistakes in the buyer's address.

The State's lawyer said Section 129 makes the penalty must, with no way to reduce it, even if the mistake is said to be honest. They said it was not a small mistake in area or address, but a full change of city, and the vehicle had gone far past the mentioned city. They also said GST officers depend fully on E-way bill details to follow goods movement.

A Division Bench with Justice Vivek Rusia and Justice Pradeep Mittal noted that the sender and receiver were the same company, and the petitioner had offices in Ahmedabad, Indore, and Jabalpur. The court noted that while the invoices said Jabalpur as destination, the E-way bill said Indore, and the petitioner had time during the trip to fix the mistake but did not.

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The court also observed that Clause 5(c) of the CBIC circular applies only to small mistakes in address in the same area. Here, the whole destination city was wrong, so it cannot be seen as a small or technical mistake. The court said the petitioner did not show any proof to clearly prove that the goods were for Jabalpur warehouse.

The court decided the penalty was rightly imposed, and the appeal body correctly rejected the appeal. The writ petition was dismissed, and no help was given to the petitioner.

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