Goods and Vehicles cannot be seized due to Non filling of Part-B of E-way bill due to technical portal error.

Case Title: Citykart Retail Pvt. Ltd. v. Commissioner Commercial Tax U.P., Gomti Nagar

Court: High Court of Allahabad

Petition Number: WRIT C No. 22285 of 2019

Category of Dispute: Detention and Seizure of Goods in Transit – E-Way Bill

Date of Judgment: 6 September 2022

Relevant Section: Section 129 of the CGST Act, 2017 and UPGST Act, 2017

Takeaway: Technical glitch in Part-B of E-Way Bill not enough to presume tax evasion

Facts of the Case [Paras 2–5]

1. The petitioner, Citykart Retail Pvt. Ltd., engaged in trading of ready-made garments, was transporting goods from Gurgaon, Haryana to Rae Bareli, U.P. on 17.04.2018.
2. The vehicle was detained at Auraiya, U.P. as Part-B of the e-way bill (vehicle number) was found missing. A show cause notice was issued under Section 129 of the CGST/UPGST Act.
3. The petitioner explained that the omission was due to a technical glitch, particularly related to vehicle numbers from Delhi not being accepted correctly in the portal format, a fact also acknowledged in a departmental circular dated 18.03.2018.
4. Despite this explanation and the advisory by the Ministry of Finance to treat minor errors leniently, tax and penalty totaling ₹2,72,600 were imposed and the petitioner paid the same to secure release of goods.
5. The appeal against this order was dismissed without consideration of the clarificatory circulars.

Question(s) in Consideration [Para 2 & 6]

• Whether the non-filling of Part-B of the e-way bill due to a technical glitch could justify detention of goods and imposition of tax and penalty under Section 129 of the CGST Act?
• Whether the authorities erred in not considering Ministry of Finance Circulars that addressed such glitches as minor errors?

Observation of Court [Paras 7–8]

1. The Court held that the only basis for seizure was non-filling of Part-B of the e-way bill, and there was no allegation of tax evasion.
2. The explanation offered by the petitioner regarding the technical glitch in entering Delhi-based vehicle numbers was substantiated by the Ministry’s circulars and advisories.
3. The issue was squarely covered by the Allahabad High Court ruling in VSL Alloys India Pvt. Ltd. v. State of U.P., dated 13.04.2018, where similar facts led to relief for the assessee.
4. The Court emphasized that prima facie no intent to evade tax could be established and hence the penalty imposition was unsustainable.

Judgment of the Court [Paras 8–10]

• The High Court quashed both the original order dated 18.04.2018 and the appellate order dated 14.05.2019.
• Directed the respondent authorities to refund the amount collected from the petitioner within two months.
• Ordered the Standing Counsel to ensure communication and compliance of this order.

Between Fine Lines

1. Merely not updating vehicle number in Part-B of an e-way bill cannot imply tax evasion.
2. Technical glitches acknowledged by departmental circulars are valid grounds for non-compliance.
3. Circulars and advisories issued by the Ministry of Finance must be considered by tax authorities.
4. Penalties under Section 129 must not be applied where there is no mala fide intent.
5. Courts will intervene where procedural rigidity results in unjustified financial burden on taxpayers.

Summary of Referred Cases