Expired e-way bills alone cannot establish tax evasion intent without additional evidence of deliberate violation

The Calcutta HC ruled that expired e-way bills alone do not establish tax evasion intent. The court found no evidence of deliberate tax evasion when goods were intercepted with expired e-way bills. While acknowledging the Supreme Court's ruling in Vardan Associates requiring compliance with e-way bill requirements, the HC distinguished this case, noting the SC's observations concerned tax payment obligations, not presumptions of evasion intent. The court emphasized that mere non-extension of e-way bills without additional evidence cannot support findings of intentional tax evasion. The petition was disposed of favorably.

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Issues Involved:
1. Validity of e-way bill and its extension.
2. Imposition of penalty u/s 129(3) of the West Bengal Goods and Services Tax Act, 2017.
3. Mens rea and intention to evade tax.
4. Obligation of the appellate authority to consider grounds of appeal.

Summary:

Validity of e-way bill and its extension:
The petitioner received an order for the supply of TMT bars and generated the necessary tax invoice and e-way bills for transportation. The e-way bill expired on 12th May 2023 before the goods could reach the consignee. The goods were intercepted on 13th May 2023 before the e-way bill could be extended.

Imposition of penalty u/s 129(3) of the West Bengal Goods and Services Tax Act, 2017:
Upon interception, the goods were detained for not being covered by a valid e-way bill. The petitioner paid the penalty u/s 129(1)(b) to release the goods. An order u/s 129(3) was passed on 18th May 2023 confirming the penalty. The petitioner appealed u/s 107, but the appellate authority dismissed the appeal, upholding the penalty.

Mens rea and intention to evade tax:
The petitioner argued that there was no deliberate intent to evade tax, citing the Kerala High Court's judgment in Hindustan Steel and Cement N. H. Karimbilangadi v. Assistant State Tax Officer, which held that payment of penalty does not absolve the authority from passing an order u/s 129(3). The petitioner also referenced the Division Bench's judgment in Asina Switchgear Private Limited v. State Tax Officer, emphasizing the need for the adjudicating officer to consider the defense before making a decision. The court noted that there was no other allegation apart from the non-extension of the e-way bill.

Obligation of the appellate authority to consider grounds of appeal:
The appellate authority failed to consider the petitioner's grounds of appeal, including the absence of mens rea and the non-evasion of tax. The court highlighted that the absence of mens rea does not automatically justify the imposition of a penalty. The Division Bench in Pushpa Devi Jain v. Assistant Commissioner of Revenue held that without evidence of willful misconduct, penalties should not be imposed.

Conclusion:
The court found no intent to evade tax and noted that the goods were intercepted within 24 hours of the e-way bill's expiry. The orders dated 18th May 2023 u/s 129(3) and 13th September 2023 u/s 107 were set aside. The writ petition was disposed of with no order as to costs.

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