Telangana HC directs Authority to Refund amount paid towards GST and Penalty on Pretext of Malpractice, Violation of E-Way Bill Rules

Telangana High Court - Authority to Refund amount - GST - Penalty - malpractice - violation of e-way bill rules - Taxscan

The Telangana High Court directed the Authority to Refund the amount paid towards GST and Penalty on pretext of malpractice, violation of e-waybill rules.

The petitioner alleges that the transporter M/s. Anmol Parcel Services, while loading the goods on the goods vehicle, loaded the material of the petitioner first, and then loaded the material of M/s. Simi Steels as the quantity of the petitioner amounting to 14320.90 kgs. was more and much heavier than the material of M/s. Simi Steels which was 2018.15 kgs and so the latter was loaded on top of the goods vehicle.

According to the petitioner, the transporter has done so for his operational convenience and it had intended to unload the material on the top of the goods vehicle at Adoni first; that the goods vehicle passed through Patancheru Ring road and crossed Jadcherla on its way to Adoni in Kurnool District; and while the vehicle was on its way to Adoni, it was intercepted at Annasagar, Mahabubnagar District by the 1st respondent on 29.12.2020 and detained by him on the ground that the ‘documents of the vehicle were defective’ and that ‘the transaction in respect of the e-waybill was concluded at Hyderabad, but they were further transported to Adoni without invoice and e- waybill’ and proposed Rs.3,68,555/- as GST and Rs.3,68,555/- as penalty, and issued a show-cause notice to the petitioner.

It is also contended that the vehicle was carrying valid documents like invoices and e-waybills and as the vehicle was carrying the same quantity of goods as mentioned in the invoice and e-waybill, the assumption of the authority about evasion of GST is imaginary and there was no violation of the CGST Act, SGST Act or IGST Act.

The petitioner alleges that the respondent authority did not consider the reply of the petitioner and demanded the petitioner to pay tax and penalty for release of the vehicle, and the petitioner was forced to pay the same under protest to secure release of the vehicle.

The petitioner contends that Section 129 of the GST Act would apply only in cases where it was established that there was intention or possibility of evading payment of tax in respect of the goods being transported, and even if some document such as waybill was missing at the time of verification, it would only create a rebuttable presumption that there was intention to evade payment of tax; and if the taxable person was able to establish that there was no such intention of evading payment of tax, then Section 129 would not be applicable.

The petitioner contends that the truck was in transit towards its destination carrying valid tax invoice and e-waybill and the 1st respondent cannot therefore hold that there was any intention on the part of the petitioner to evade tax; and that there was also no material or evidence to show that the petitioner was unloading the material at some other place not mentioned in the invoice or the e-waybill and was trying to evade tax.

According to the respondent, as per logic since Hyderabad comes first and not Adoni, when the vehicle comes from Dadra and Nagar Haveli, the consignment of 14.30 tonnes would be offloaded at Hyderabad, and then 2.01 tonnes consignment should proceed towards Adoni; and the vehicle was therefore rightly detained by him when it was more than 100 kms from Hyderabad and carrying the full load of 16.31 tonnes.

According to him, the load meant to the petitioner at Hyderabad was not offloaded and thereby it looked as if the said goods were also meant for another destination, that this is malpractice and violation of e- waybill rules and so the vehicle was detained rightly.

“We are also of the opinion that the collection of the amount of Rs.3,68,555/- towards GST and penalty of Rs.3,68,555/- from the petitioner on 04.01.2021 was by way of economic duress since the petitioner had no choice but to pay it to secure release of the vehicle and so the petitioner is entitled to refund of the same,” the court said.

The division bench of Justices M.S.Ramachandra Rao and T.Vinod Kumar held that the order of detention in Form GST MOV-06 passed under Section 129(3) of the CGST Act, 2017 by the respondent is set aside.

The court declared that the action of the respondent in detaining the goods conveyance No.AP13X 6980 on 29.12.2020 at Annasagar, Bhoothpur Mandal, Mahabubnagar District and demanding payment of GST and penalty is arbitrary, illegal and violative of Articles 14 and 300A of the Constitution of India; and the respondents are directed to refund to the petitioner within four weeks the sum of Rs.3,68,555/- towards GST and penalty of Rs.3,68,555/- paid by the petitioner with interest at 6% per annum from January 4, 2021 till the date of payment.

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