"Intention To Evade Tax" Must Be Directly Connected to Activity Of Trader: Punjab and Haryana High Court
The Punjab and Haryana High Court bench of Justice Ajay Tewari and Justice Pankaj Jain has held that the intention to evade tax must be directly connected to the activity of the trader. The petitioner/assessee is in the business of selling copper wires and copper scraps, which are purchased from the dealers located throughout the country. The petitioner claimed that in the...
The Punjab and Haryana High Court bench of Justice Ajay Tewari and Justice Pankaj Jain has held that the intention to evade tax must be directly connected to the activity of the trader.
The petitioner/assessee is in the business of selling copper wires and copper scraps, which are purchased from the dealers located throughout the country.
The petitioner claimed that in the ordinary course of business, he sold copper scraps to M/s R.N.T. Metals Pvt. Ltd., Bhiwadi (Rajasthan) for an amount of Rs. 83,69,594, including 18% IGST.
While the goods were in transit, they were intercepted by the department. The goods were accompanied by a valid invoice and an e-way bill. On the request of the authorities, the documents were produced; however, the vehicle carrying goods was ordered to be stationed and Form GST MOV-02 was issued.
The reply to GST MOV-02 was filed and on the same day the department issued an Order of Detention under Section 129(1) of the CGST Act on Form GST MOV-06.
The department pointed out that, on a physical verification, a discrepancy was found between the actual quantity and the quantity shown on the invoice and e-way bill. Thus, it was claimed that by showing a lesser quantity, the petitioner intended to evade tax.
The court relied on the decision of the Punjab and Haryana High Court in the case of M/s. Shiv Enterprises vs. State of Punjab and others, in which it was held that the alleged 'intent to evade tax' must have a direct nexus with the activity of the trader. The opinion formed by the authorities must reflect the nexus before proceeding under Section 130 of the CGST Act. A trader cannot be accused of having the intention of evading payment of tax for an act or omission on the part of a person not immediately linked to trading activity.
"It cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of Rs.1276717.68/- on a consignment cannot be said to have an intent to evade tax amounting to Rs.11000," the court said.
Case Title: M/s Raghav Metals Versus State of Haryana and others
Citation: 2022 LiveLaw (PH) 37
Case No.: CWP No.25057 of 2021
Dated: 14.032022
Counsel For Appellant: Advocate Sandeep Goyal
Counsel For Respondent: Advocate Shruti Jain Goyal