GST Evasion Can't Be Presumed Merely Because Goods Were Delivered After Expiry Of E-Way Bill Due To External Factors Like Traffic Block: Supreme Court
The Supreme Court imposed cost on GST official for unnecessary harassment of assessee.
The Supreme Court has observed that non-extension of e-way bill would not automatically amount to evasion of tax, especially when the non-delivery of goods within the validity period of the e-way bill was due to external factors, like, traffic blockage. A Bench comprising Justices Dinesh Maheshwari and Hrishikesh Roy dismissed an appeal filed by the Revenue Department assailing the...
The Supreme Court has observed that non-extension of e-way bill would not automatically amount to evasion of tax, especially when the non-delivery of goods within the validity period of the e-way bill was due to external factors, like, traffic blockage.
A Bench comprising Justices Dinesh Maheshwari and Hrishikesh Roy dismissed an appeal filed by the Revenue Department assailing the order of the Telangana High Court, which had set aside the order, imposing tax and penalty passed by a Deputy Sales Tax Officer, with cost.
Factual Background
The respondent (M/s. Satyam Shivam Papers Pvt. Ltd.), a distributor of paper, generated an e-way bill dated 04.01.2020 to make an intra-State supply. The auto trolley engaged to make the delivery on 04.01.2020 (Saturday) could not do so because it got stuck in traffic on account of political rallies opposing CAA and NRC. The driver of the auto trolley took the goods to his residence to deliver them on the next working day, i.e. 06.01.2020. On its way for delivery on 06.01.2020, he was detained by a Deputy State Tax Officer and a detention notice was served alleging that the validity of the e-way bill had expired and that the consignment was unloaded in a private premise (residence of the driver). Representation was made by the respondent providing reasons for the delay in delivery. Rule 138 of the CGST Rules, 2018, wherein the validity of e-way bill for more than 20 kms can be extended by an additional day was also cited by the respondent. The Deputy Sales Tax Officer imposed tax and penalty on the respondent. A writ petition was filed before the Telangana High Court challenging the said order, which was eventually allowed and a cost of Rs. 10,000 was imposed on the Revenue Department.
Decision of the Supreme Court
The Court was satisfied with the examination of facts and the subsequent findings of the High Court. The Apex Court found the inference drawn by a Deputy Sales Tax Officer that the respondent was evading tax just because its e-way bill had expired a day earlier, without considering the explanation provided in the representations, to be baseless. It asserted that the respondent had no intention to evade tax and the delay in delivery was due to traffic blockage, which was an event beyond the control of the respondent. The Court also suspected the intention of the Deputy Sales Tax Officer in pursuing the litigation against the respondent as after the goods were detained they were kept at the residence of his relative. Considering the harassment meted out to the respondent by the Revenue Department, the Court decided to enhance the cost imposed to Rs. 59,000, which was over and above the cost of Rs. 10,000 imposed by the High Court. The Supreme Court directed that the State was entitled to recover the cost amount from the officers responsible for the 'entirely unnecessary litigation'.
Case Name: Assistant Commissioner (ST) And Ors. v. M/s. Satyam Shivam Papers Pvt. Ltd. And Anr.
Citation: 2022 LiveLaw (SC) 87
Case No. and Date: Special Leave Petition (C) 21132 of 2021 | 12 Jan 2022
Corum: Justices Dinesh Maheshwari and Hrishikesh Roy
Counsel for the Petitioners: Advocates, Mr. P. Venkat Reddy, Mr. Prashant Tyagi, Mr. P. Srinivas Reddy, Advocate-on-Record M/S. Venkat Palwai Law Associates.