2023 (12) TMI 1406 - HC - GST

Levy of tax and Penalty - whether mere expiration of e-Way Bill during the course of transportation could attract the wrath of Section 129 read with Rule 138 of the Act and Rules of 2017 and if at all the same could attract penalty in terms thereof? - HELD THAT - Recently the issue at hand was decided by the Allahabad High Court in Sleevco Traders through Its Proprietor Shri Alok Gupta 2022 (5) TMI 845 - ALLAHABAD HIGH COURT . The High Court after taking into consideration the fact and the circumstances in which the e-Way bill expired held that there is neither any intention to evade payment of tax nor any fraud nor any contravention of the Act as valid documents were accompanying with the goods as required under the Act . The aforesaid order was challenged by the Revenue before the Hon ble Apex Court in ADDITIONAL COMMISSIONER GRADE-2 (APPEAL) FIFTH COMMERCIAL TAX ANR. VERSUS M/S SLEEVCO TRADERS 2023 (7) TMI 418 - SC ORDER and the Hon ble Apex Court dismissed the appeal of the State inter alia holding as This Court is of the opinion that there is no infirmity in the judgment of the High Court which is correctly appreciated . Admittedly; in the instant case the revenue has not taken into consideration the fact that because of denial of permission to enter into Adityapur Industrial Area due to the festive season (Deepawali) the vehicle (Truck) was bound to stop for some time as a result of which the validity of the e-Way Bill expired. It is also admitted fact that the truck was within 1 KM of the Industrial Area and not far thus it is evident that the expiry of e-Way Bill due to aforesaid reason should not and cannot amount to intention of evasion of tax and therefore no extent of penalty would arise. This Court in similar facts and circumstance in the case of Rivigo Services Private Limited Versus The State of Jharkhand Ors. 2022 (11) TMI 391 - JHARKHAND HIGH COURT had quashed and set aside the order passed by the revenue and remanded the matter back to the authorities for fresh consideration. Inasmuch as there is neither any intention to evade payment of tax nor any fraud has been committed and valid documents were accompanying with the goods as required under the Act; save and except the E-Way Bill which had expired by few hours and this Court cannot ignore the fact that the vehicle was intercepted very near to the Check-Post and as stated by the petitioner and not controverted by the Revenue that it was the festive season of Diwali. Conclusion - The mere expiration of an e-Way Bill without intent to evade tax does not justify the imposition of penalties under Section 129. The petitioner had already paid the penalty; interest of justice would be sufficed by allowing the petitioner to claim for refund and if any such application for refund is preferred; the competent authority shall consider the same within a period of 8 weeks from the date on which such application is made and refund be effected if there are no other legal impediment - Application allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the mere expiration of an e-Way Bill during transportation can attract the provisions of Section 129 of the Central Goods and Services Tax Act, 2017, and Rule 138 of the Central Goods and Services Tax Rules, 2017, thereby warranting the imposition of tax and penalty.
Whether the actions of the authorities in imposing tax and penalty due to the expired e-Way Bill were justified, considering the circumstances and the absence of intent to evade taxes.
Whether the principles of natural justice were violated in the process of imposing tax and penalty on the petitioner.
Whether the petitioner is entitled to a refund of the penalty paid due to the expired e-Way Bill.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Expiration of e-Way Bill and Applicability of Section 129

Relevant legal framework and precedents: Section 129 of the Central Goods and Services Tax Act, 2017, and Rule 138 of the Central Goods and Services Tax Rules, 2017, govern the detention, seizure, and release of goods and conveyances in transit. Precedents from the Allahabad and Calcutta High Courts were considered, which held that mere expiration of an e-Way Bill without intent to evade tax does not justify penalties.
Court's interpretation and reasoning: The court interpreted that the expiration of the e-Way Bill alone, without any intention to evade tax, does not attract the provisions of Section 129. The court emphasized that valid documents accompanied the goods, and the expiration was due to circumstances beyond the control of the petitioner.
Key evidence and findings: The court noted that the truck was intercepted near the destination, and the expiration was due to a delay caused by a festival, which was not a deliberate act to evade taxes.
Application of law to facts: The court applied the law by considering the absence of intent to evade tax and the proximity of the truck to its destination, concluding that the penalty was unjustified.
Treatment of competing arguments: The court considered the respondent's argument that the petitioner had been given an opportunity for a hearing, but found that the imposition of penalty was not warranted due to the lack of intent to evade tax.
Conclusions: The court concluded that the imposition of tax and penalty due to the expired e-Way Bill was not justified, and the petitioner was entitled to relief.

Issue 2: Violation of Principles of Natural Justice

Relevant legal framework and precedents: The principles of natural justice require that parties be given a fair opportunity to present their case. The court considered whether this principle was upheld in the proceedings.
Court's interpretation and reasoning: The court found that the petitioner was not given a proper opportunity to present their case, as the order was passed without adequate consideration of the petitioner's explanations and circumstances.
Key evidence and findings: The court noted that the petitioner had raised valid reasons for the expiration of the e-Way Bill, which were not adequately considered by the authorities.
Application of law to facts: The court applied the principles of natural justice by determining that the petitioner was not afforded a fair hearing, leading to an unjust imposition of penalties.
Treatment of competing arguments: The court acknowledged the respondent's claim of providing a hearing but found it insufficient in light of the circumstances.
Conclusions: The court concluded that the principles of natural justice were violated, warranting the quashing of the orders imposing penalties.

Issue 3: Entitlement to Refund of Penalty

Relevant legal framework and precedents: The court considered the provisions for refund under the Central Goods and Services Tax Act, 2017, in the context of unjust penalties.
Court's interpretation and reasoning: The court reasoned that since the penalty was unjustly imposed, the petitioner is entitled to a refund of the amount paid.
Key evidence and findings: The court found that the petitioner had already paid the penalty and was entitled to apply for a refund.
Application of law to facts: The court applied the refund provisions to the facts, directing the authorities to process the refund application.
Treatment of competing arguments: The court did not find any substantial argument from the respondents against the refund entitlement.
Conclusions: The court concluded that the petitioner should be allowed to claim a refund, and the authorities must process it within a specified timeframe.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "There is neither any intention to evade payment of tax nor any fraud nor any contravention of the Act, as valid documents were accompanying with the goods as required under the Act."
Core principles established: The mere expiration of an e-Way Bill, without intent to evade tax, does not justify the imposition of penalties under Section 129. The principles of natural justice must be upheld in tax proceedings.
Final determinations on each issue: The court quashed the orders imposing tax and penalty, concluded that the principles of natural justice were violated, and directed the authorities to process the refund of the penalty paid by the petitioner.

← Previous Next →