Allahabad HC: No Penalty for E-Way Bill Mistake Without Intent to Evade Tax

1.Background of the Case

A company (M/s. Varun Beverages Ltd) had a typographical mistake in its e-way bill — instead of the correct number ‘0401’, they mistakenly entered ‘2224’.

The GST department treated it as a violation and imposed a penalty under Section 129 of the CGST Act, which deals with detention and seizure of goods.

2.What the Allahabad High Court Observed

The court reviewed earlier judgments and said:

A penalty can only be imposed if there is mens rea (intent to do wrong) or intention to evade tax.

A simple typing error (like a wrong number) does not prove any intention to cheat.

3.Examples Mentioned

The court also referred to another case of M/s. Varun Beverages, where the vehicle number had a small letter mismatch ("HR–73"), and it was also considered a minor error, not tax evasion.

4.No Penalty for Minor Mistake

The court made it clear:

If there’s no sign of fraud or evasion, and the mistake is clearly a human error, then penalties are not justified.

Penalty orders in this case were found to be illegal and outside legal authority.

5.Court’s Final Decision

The High Court:

Cancelled the penalty orders dated 17 June 2022 and 1 February 2021.

Allowed the writ petition filed by the company.

Directed that the company be given necessary relief within 4 weeks.