In a recent development, the Allahabad High Court, through Hon’ble Justice Shekhar B. Saraf, delivered a significant judgment in Writ Tax No. 141 of 2023 filed by Globe Panel Industries India Pvt. Ltd. against the State of U.P. and Others.

The writ petition, filed under Article 226 of the Constitution of India, challenged a penalty order imposed under Section 129(3) of the CGST Act. The petitioner contended that the only discrepancy detected during the detention was the expiration of one E-Way Bill. Notably, the court found no other evidence indicating an intention by the petitioner to evade tax.

Justice Shekhar B. Saraf’s ruling emphasized that a mere technical violation, such as an expired E-Way Bill, without any demonstrated intention to evade tax, should not warrant the imposition of a penalty under Section 129(3) of the CGST Act. The court opined that penalizing such technical infractions alone would be unjust.

This judgment is expected to have implications for similar cases, setting a precedent that authorities should consider the intent behind the violation before imposing penalties under Section 129(3) of the CGST Act. Businesses facing penalties for similar technical violations may find this ruling supportive in their legal challenges.

The decision aligns with the principle of proportionality in penal provisions, signaling a judicial stance against imposing penalties disproportionate to the gravity of the offense, especially in cases lacking evidence of intentional tax evasion.

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