2023 (11) TMI 456 - HC - GST

Vehicle breakdown beyond control doesn't justify tax evasion penalty when valid e-way bill proves genuine transaction

M/s Sun Flag Iron And Steel Company Limited Versus State Of U.P. And 3 Others

Allahabad HC allowed petition challenging penalty for tax evasion where goods lacked proper documentation. Court held that valid e-way bill generated and ... Levy of penalty - evasion of payment of tax - goods not accompanied with proper documents - petitioner has failed to justify for not filing the documentary evidence at the time of detention - HELD THAT:- The purpose of e-way bill is that the department should know the movement of goods. Once the e-way bill has been generated and same has not been cancelled by the petitioner within the time prescribed under the Act, the movement of goods as well as genuineness of transaction in question cannot be disputed. The goods in question could not reach to its destination due to the breakdown of vehicle as stated above and after repair, the vehicle was ready for its onward journey but the same was intercepted in the intervening night of 2/3.6.2023. Since the authorities below have not recorded a finding that there was any intention of the petitioner to evade the payment of tax, the penalty is not justified. The fact remains that vehicle could not reach its destination within the time mentioned in the e-way bill as the situation is beyond control of the petitioner as mentioned in the affidavit of driver of the vehicle and there was also no intention of the petitioner to evade the payment of tax, thus the impugned orders are not justified in the eyes of law and are liable to be quashed. The authorities below are directed to refund the amount, if any, deposited by the petitioner in pursuance of the impugned orders, within a period of one month from the date of production of certified copy of this order before the concerned authority - Petition allowed. Issues:The judgment involves the entertainment of a Writ Tax by the High Court due to the non-functionality of the GST Tribunal in Uttar Pradesh. The petitioner challenges orders passed by respondents related to penalty imposition on goods transportation.Facts:The petitioner, a registered company engaged in manufacturing and sale of steel, dispatched a consignment to Rajasthan, which got stuck in mud during transit through Uttar Pradesh. Despite efforts to resolve the issue, the vehicle was intercepted, and a penalty of Rs. 8,43,456 was imposed. The petitioner appealed, providing documentary evidence, but the appeal was rejected.Petitioner's Arguments:The petitioner contended that valid documents accompanied the goods, and the breakdown was beyond their control. They submitted evidence, including affidavits, to support their claims. The petitioner emphasized that there was no intention to evade tax, and the penalty was unjustified.Respondent's Arguments:The respondent argued that the goods lacked proper documentation, as the e-way bill had expired. They justified the penalty imposition based on the violation of rules and failure to provide evidence promptly.Court's Analysis:The Court noted that the goods had valid documentation, and the breakdown causing delay was supported by the driver's affidavit. The Court emphasized that the intent to evade tax is crucial for penalty imposition under GST laws.Precedents and Rulings:Citing previous cases, the Court highlighted that penalty under GST requires proof of intent to evade tax. In cases where delays or technicalities occur without intent, penalties were quashed. The Court directed authorities to refund any deposited amounts and quashed the impugned orders.Conclusion:The Court allowed the writ petition, quashing the orders and directing the refund of any deposited amounts. The judgment reiterated the importance of establishing intent to evade tax for penalty imposition under GST laws.