2021 (6) TMI 378 - HC - GST

Release of detained goods - expiry of E-way bill - Inter-state purchases - Rule 138(10) of the GST Act 2017 - allegation that the e-way bill had expired a day earlier - traffic blockage due to agitation - abuse of power by the officer - HELD THAT - The admitted facts are that petitioner had dispatched goods on the auto trolley bearing No.TS 07 UF 1008 on 04.01.2020 and the driver of the auto trolley had in his possession tax invoice (Ex.P.2) dt.04.01.2020 as well as e-way bill (Ex.P.3) dt.04.01.2020 and that the distance to be traveled by the auto trolley was only 36 kms - Petitioner alleges that the said auto trolley along with other auto trolleys started for delivery of the paper at 04 33 p.m. on 04.01.2020 to the consignee but on its way to Bashierbagh since there was a political rally opposing CAA and NRC by political parties the roads were blocked and the traffic could not move forward or backward; that the driver of the said auto trolley waited till 08 30 p.m. on the road; by that time having realized that the shop of the buyer would be closed the driver of auto trolley took the goods to his residence with a desire to deliver the goods on the next day. The following day 5.1.2020 being a Sunday the attempt was made by the driver of the auto trolley to deliver them to the buyer on 6.1.2020 when it was detained at 12.35 pm by issuing detention notice dt.06.01.2020. It was the duty of 2nd respondent to consider the explanation offered by petitioner as to why the goods could not have been delivered during the validity of the e-way bill and instead he is harping on the fact that the e-way bill is not extended even four (04) hours before the expiry or four (04) hours after the expiry which is untenable - there was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner merely on account of lapsing of time mentioned in the e-way bill because even the 2nd respondent does not say that there was any evidence of attempt to sell the goods to somebody else on 06.01.2020. On account of non-extension of the validity of the e-way bill by petitioner or the auto trolley driver no presumption can be drawn that there was an intention to evade tax. There has been a blatant abuse of power by the 2nd respondent in collecting from the petitioner tax and penalty both under the CGST and SGST and compelling the petitioner to pay Rs. 69, 000/- by such conduct - The respondents are directed to refund the said amount collected from petitioner within four (04) weeks with interest@ 6% p.a from 20.1.2020 when the amount was collected from petitioner till date of repayment. The 2nd respondent shall also pay costs of Rs. 10, 000 to the petitioner in 4 weeks. - Petition allowed.

Summary

Issues Involved:
1. Detention of goods due to expiry of e-way bill.
2. Alleged illegal actions by the Deputy State Tax Officer.
3. Non-consideration of petitioner's representations.
4. Alleged evasion of tax by the petitioner.
5. Validity of the order passed by the Senior Assistant.
6. Refund of tax and penalty paid by the petitioner.

Issue-wise Detailed Analysis:

1. Detention of Goods Due to Expiry of E-way Bill:
The petitioner, a Private Limited Company, dispatched goods on 04.01.2020 with a valid e-way bill and tax invoice. Due to a political rally blocking traffic, the goods could not be delivered on time, and the e-way bill expired. On 06.01.2020, the goods were detained by the Deputy State Tax Officer (2nd respondent) for the expired e-way bill. The petitioner contended that the delay was due to circumstances beyond their control, and the e-way bill could have been extended.

2. Alleged Illegal Actions by the Deputy State Tax Officer:
The petitioner alleged that the 2nd respondent unloaded the goods at a private residence without providing an acknowledgment, which was arbitrary and illegal. The 2nd respondent justified his actions by stating the goods were kept in a known person’s premises due to rain and non-cooperation from the drivers. The court found this action to be a blatant abuse of power.

3. Non-consideration of Petitioner’s Representations:
The petitioner submitted representations on 07.01.2020 and 08.01.2020 explaining the delay and referring to the Allahabad High Court decision. The 2nd respondent did not acknowledge these representations and proceeded to issue a detention notice and demand for tax and penalty. The court held that the 2nd respondent failed to consider the explanations provided by the petitioner, which was arbitrary and illegal.

4. Alleged Evasion of Tax by the Petitioner:
The 2nd respondent claimed that the expired e-way bill indicated tax evasion. The court found no evidence supporting this claim and noted that the mere expiration of the e-way bill did not imply an intention to evade tax. The court emphasized that the 2nd respondent did not provide any material evidence of tax evasion.

5. Validity of the Order Passed by the Senior Assistant:
The order demanding tax and penalty was signed by the Senior Assistant, not the 2nd respondent, which the petitioner argued was unauthorized. The court agreed, noting that the Senior Assistant was not authorized to pass such an order, and the 2nd respondent's failure to address the petitioner’s representations was improper.

6. Refund of Tax and Penalty Paid by the Petitioner:
The court concluded that the petitioner was compelled to pay Rs. 69,000/- under duress and without proper consideration of their explanations. The order dated 22.01.2020 was set aside, and the respondents were directed to refund the amount with interest at 6% per annum from 20.01.2020 until repayment. Additionally, the 2nd respondent was ordered to pay costs of Rs. 10,000 to the petitioner.

Conclusion:
The court allowed the writ petition, set aside the impugned order, and directed the refund of the collected amount with interest and costs. The court condemned the 2nd respondent's actions as arbitrary, illegal, and a blatant abuse of power.