The Telangana High Court ruled that the mere non-extension of the validity of the e-way bill does not amount to tax evasion.
The petitioner, M/S Satyam Shivam Papers Pvt Ltd is a sole distributor of M/s.International Papers Limited, Andhra Pradesh, and it also affects inter-State purchases of papers from M/s. Emami Papers Ltd. Orissa receives supplies of paper from these two companies and submits monthly GST returns on-line and also pays GST payable under the CGST and SGST Act, 2017.
The petitioner contends that it made an intra-State supply of paper through a tax invoice dated January 4, 2020 to M/s. Sri Ayappa Stationery and General Stores, Station Road, Medchal in Telangana State which is also registered under the GST Act and had also generated an e-way bill dated January 04, 2020. According to it, the goods were delivered to a transporter for making delivery to the consignee by an auto trolley.
It was alleged by the petitioner that the respondent authority unloaded the paper boxes at a private premises in the house of respondent’s relative’s at Marredpally, Secunderabad without tendering any acknowledgment of receipt of detention of the goods in his custody, and released the auto trolley by unloading the goods in such a manner. Petitioner alleges that this action of the respondent is arbitrary and illegal and he could not have taken physical possession of the goods in such a manner.
The petitioner submitted that he waited for release of the detained goods till 19.01.2020 and since it did not seem likely that the respondent would release the goods in spite of submitting explanation for release, it made payment of Rs.17,250/- under CGST Act, Rs.17,250/- under SGST Act, and Rs.17,250/- towards penalty under CGST Act and (iv) Rs.17,250/- towards penalty under SGST Act through NEFT, amounting to Rs.69,000/-, and also submitted a letter in the office of the respondent . According to the petitioner, some of the paper packets in the boxes had also gone missing in the meantime.
On the other hand the respondent contended that a dealer can extend the validity of an e-way bill in Part-B and the same can be sent even to the driver’s mobile phone, but the dealer willfully did not do so, and expiry of the e-way bill cannot be treated as a technical mistake. He justified the levy of penalty and tax on the petitioner in this manner.
The division bench of Justice M.S.Ramachandra Rao and Justice T.Vinod Kumar held that there was no material before the 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 respondent does not say that there was any evidence of attempt to sell the goods to somebody else on January 6, 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.
The court further ruled that 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.
“We deprecate the conduct of respondent in not even adverting to the response given by petitioner to the Form GST MOV-07 in Form GST MOV – 09, and his deliberate intention to treat the validity of the expiry on the e-way bill as amounting to evasion of tax without any evidence of such evasion of tax by the petitioner,” the court said.
The court directed the respondent authority to refund the said amount collected from petitioner within four (04) weeks with interest at the rate of 6% p.a from January 20, 2020 when the amount was collected from petitioner till date of repayment. The respondent shall also pay costs of Rs.10,000 to the petitioner in 4 weeks.
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