Commercial Tax Officer Not Obligated To Physically Verify E-Way Bills: Madras High Court

The Madras High Court has quashed the suspension order of a commercial tax officer who issued refunds to fake exporters without verification.

The bench of Justice N. Anand Venkatesh has observed that, as a quasi-judicial authority, if the petitioner has fulfilled all the requirements that are provided under the relevant Act and the circular, that by itself is sufficient compliance before passing the order of refund of the tax. If, for any reason, it ultimately turns out to be a fake export by a fraudster, the order passed by the petitioner by itself cannot result in the suspension of the petitioner. When the petitioner was exercising his quasi-judicial function, unless there was strong prima facie material against the petitioner involving moral turpitude, grave misconduct, etc., suspension must be the last resort.

The petitioner is working in the post of Commercial Tax Officer, which has now been re-designated as State Tax Officer. He is assigned the statutory duties under the Goods and Service Tax Act (GST), with effect from July 1, 2017. Among many other statutory functions, the petitioner has also been assigned the duty of passing orders for refund claims under the statutory forms. As per the regulations, the petitioner has to pass orders within a week from the date of filing of a refund claim by the tax payer under Form RFD-01, where 90% of the claim to be refunded is decided. Under RFD-04, the petitioner has to decide the refund of the balance of 10%.

One of the refund claims made by Khan Traders was allotted to the petitioner in March 2023. Khan Traders filed an online application under statutory form RFD-01 on April 19, 2023, claiming a refund. Along with the claim, he also submitted various other documents. The petitioner, after verifying the documents and checking the ICEGATE site, was granted a refund under RFD-02 for up to 90% of the total claim. Thereafter, under RFD-05, the balance of 10% was also refunded.

The department noted that the petitioner failed to verify the e-way bills, which will specifically show the movement of the vehicle when it is crossing various tolls. Khan Traders was also attempting to claim a refund of the accumulated input tax credit by playing fraud, and the Directorate of Revenue Intelligence had been warned to withhold any such application after the claim was made.

The petitioner was placed under suspension by the department since the petitioner issued a refund to a fake exporter without properly verifying the relevant details with undue haste and with malafide intention. The petitioner has caused revenue loss to the government exchequer to the tune of Rs. 6,90,01,127.

The petitioner challenged the order of suspension mainly on the ground that there are no strong prima facie materials against the petitioner. There was a clear lack of application of mind on the part of the department in justifying the suspension on the ground that the petitioner did not check or verify the E-way bills, which was not a requirement under the circular dated March 23, 2020.

The court noted that nowhere under the Act or under the circular was the petitioner expected to verify the E-way bills physically. If the petitioner has to be involved in this exercise, obviously he will not be able to process the application and pass orders within a period of seven days.

The court, while considering the public interest involved, stated that it would not be desirable to keep the petitioner at the same station. Therefore, it will be left open to the department to post the petitioner in some insensitive post in a different place till the completion of the departmental proceedings.

Counsel For Petitioner: V. Prakash

Counsel For Respondent: Vasanthamala

Case Title: S.Doctor Viswanathan Versus The State of Tamil Nadu

Citation: 2024 LiveLaw (Mad) 322

Case No.: W.P.No.33639 of 2023 and W.M.P.No.33480 of 2023

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