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2024 (5) TMI 1428 - HC - GSTPenalty order - Violation of provisions related to E-Way Bill - classification of goods as Over Dimensional Cargo (ODC) due to the speed at which they were transported - penalty imposed on the ground that the goods had travelled at a fast speed and therefore according to the authorities could not be categorised as the ODC - intent to evade tax or not - HELD THAT - In the present case the entire imposition of penalty is based on surmises and conjectures without there being any basis or finding with regard to intention to evade tax. One may rely upon the judgments of this Court in the case of GIRISH AND COMPANY VERSUS STATE OF UP AND 4 OTHERS 2024 (1) TMI 1107 - ALLAHABAD HIGH COURT and M/S. HINDUSTAN HERBAL COSMETICS VERSUS STATE OF U.P. AND 2 OTHERS 2024 (1) TMI 282 - ALLAHABAD HIGH COURT where it has been held that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. The mere fact that the goods in question were transported at a faster speed does not constitute sufficient grounds for penalization in light of the departmental circular explicitly excluding transit speed as a criterion for classification. The reliance on speculative assumptions and conjectural reasoning to justify the imposition of penalties is antithetical to the principles of fairness and equity that underpin the rule of law. The prospect of facing penalties serves as a powerful disincentive for individuals and entities tempted to engage in fraudulent or deceitful conduct thereby promoting voluntary compliance with tax laws and fostering a culture of accountability and transparency. In the absence of wilful intent penalties lose their deterrent effect and instead become arbitrary exercises of state power subjecting innocent taxpayers to undue hardship and injustice. It is imperative that penalty imposition be grounded in sound reasoning and substantive evidence of wilful misconduct. The said orders are quashed and set-aside - Petition allowed.
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