E-Way Bill 

Hon'ble High court of Kerala in the case of Alfa Group Vs. The Assistant State Tax Officer 

There is no provision under the GST Act which mandates that the goods shall not be sold at prices below the MRP declared thereon. Further, there is nothing in Ext.P2 order that shows that, on account of the alleged wrong classification of the goods there was any difference in the rate of tax that was adopted by the assessee. In my view when the statutory scheme of the GST Act is such as to facilitate a free movement of goods, after self assessment by the assessees concerned, the respondents cannot resort to an arbitrary and statutorily unwarranted detention of goods in the course of transportation. Such action on the part of department officers can erode public confidence in the system of tax administration in our country and, as a consequence, the country’s economy itself. Under such circumstances, I quash Ext.P2 detention order and direct the respondents to forthwith release the goods belonging to the petitioner on the petitioner producing a copy of this judgment before the said authority. I also direct the Commissioner, Kerala State Taxes Department, Thiruvananthapuram to issue suitable instructions to the field formations so that such unwarranted detentions are not resorted to in future. The Registry shall communicate a copy of this judgment to the Commissioner, Kerala State Taxes Department, Thiruvananthapuram for necessary action

Posted on: 29/07/2022

Hon'ble High court of Chhatisgarh in the case of K. P. Sugandh Ltd. Vs State Of Chhattisgarh (Chhatisgarh High Court)

“The High Court relied on the judgment of Kerala High Court in ‘Alfa Group v. Assistant State Tax Officer’ – 2019 (11) TMI 943 - KERALA HIGH COURT In this case the Kerala High Court held that there is no provision under the GST Act which mandates that the goods shall not be sold at prices below the MRP declared thereon. The scheme of the GST Act is to facilitate a free movement of the goods, after self-assessment by the assessee concerned, the Authorities cannot resort to an arbitrary and statutory unwarranted detention of goods in the course of transportation. The High Court further held that such action on the part of the department officers can erode public confidence the country’s economy itself. The High Court directed the Authorities to release the goods. The High Court further directed the Commissioner, Kerala State Taxes Department, Trivandrum to issue suitable instructions to the field formations so that such unwarranted detentions are not resorted to in future.

The High Court was of the opinion that since the case of the petitioners at the outset itself was that the entire proceedings for detention of the vehicle and the seizure of the goods are in total contravention to the GST law, relegating the petitioners to avail the alternative remedy of appeal under section 107 of the Act would not be proper, legal and justified. The High Court also found that the proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law.

The High Court held that undervaluation is not a good in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Act read with Rule138. The High Court held that the order passed under section 129 by the Authorities is unsustainable and deserved to be set aside. The High Court directed the respondents to release the goods belonging to the petitioners based on the invoice bill as well as e-way bill”.

Posted on: 29/07/2022

Hon'ble Appellate authority of Himachal pradesh in the case of Integrated Constructive Solutions Vs Vs ACST&E-cum-Proper Officer (GST Appellate Authority, Himachal Pradesh)

Posted on: 25/07/2022

Hon'ble Kerala High Court in the case of M/S. M.R. Traders vs Assistant State Officer,  

Posted on: 25/07/2022

Hon'ble Himachal Pradesh High Court in the case of M/S. K.B Enterprises vs Assistant Commissioner of State,  

Posted on: 25/07/2022

Hon’ble Telangana High Court in the case of Sathyam Shivam papers Ltd Vs. Asst.Commissioner St and 4 Others WP.No.9688/2020( 2022- June-4)

There was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner mererly on account of lapsing of time mentioned in the e-way bill because even the 2nd respondent does not say that there was any evidence of attempt to sell the goods to somebody else on

06.01.2020' 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'

As per Hon'ble Court ,Opinion there has been a blatant abuse of power to the 2nd respondent in collecting from the petitioner tax and penalty both under CGST and SGST and compelling the petitioner to pay Rs.69,000/- by such conduct.

we deprecate the conduct of 2nd 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. and 

The 2nd respondent shall also pay costs of Rs. 10,000/- to the petitioner in 4 weeks.”

Posted on: 15/11/2022

Hon’ble Tiripura High Court in the case of Tvl. Kalpana Stores vs State of tripura and others WP. 729/2019

The determination of payable tax and interest in terms of clause (a) or (b) of sub-section (1) upon payment of which the goods or the transport vehicle would be released or upon furnishing security in terms of clause (c), has to be after a notice to the person concerned and granting an opportunity of being heard in this respect as provided in sub-sections (3) and (4) of Section 129 of the said Act. In the present case, no such steps were taken. The

State authority straightway passed the order dated 25.10.2018which is titled as “Order of Demand of Tax and Penalty”. This order thus clearly breaches the requirement of sub-sections (3) and (4) of Section 129 of the said Act. In view of such facts despite availability

of appellate remedy, present petition should be entertained. 

The said order is, therefore, quashed.

In fact of the case, since the petitioner has already deposited the amount indicated in the said order dated 25.10.2018 and the goods along with the transport vehicle are already released, by moulding the relief it is provided as under:

(a) The respondents shall give a notice of hearing to the petitioner why the said tax with penalty demand should not be confirmed giving clear 4(four) weeks time to respond;

(b) The petitioner will file written opposition to such demand with documents as may be found necessary within the said stipulated period;

(c) The competent authority shall thereafter pass a speaking order within a period of 4(four) months from today;

Posted on: 15/11/2022

Hon’ble Madras High Court in the case of Smart Roofing Private Limited Vs State Tax Officer 

The petitioner has challenged the impugned order dated 25.03.2022 in Form GST Mov-9 seeking to impose penalty of Rs.2,50,387/- under CGST and SGST each, totally for a sum of Rs.5,00,774/- under Section 129(3) of the CGST Act, 2017. 2. The petitioner had consigned the goods from its main place of business at Chennai to its additional place of business, Sastha Bombalan Modern Rice Mill, 3/237-B, Chintamani Road, Anuppandi, Madurai.

This was not the additional place of business, as per the original registration certificate obtained by the petitioner on 02.08.2018. However, in the E-way bill and the delivery Challan, the petitioner had declared the consignee as 130, Ring Road Chintamani, Madurai, though the consignment was meant for being discharged at its new place of business at Sastha Mombalan Modern Rice Mill, 3/237-B, Chintamani Road, Anuppandi, Madurai, Tamil Nadu 625 009.

Under these circumstances, the consignment along with lorry was detained on 22.03.2022. A show cause notice dated 23.03.2022, to which the petitioner has replied on 25.03.2022, which has culminated in the impugned order dated 25.03.2022. 3. It is the specific case of the petitioner that there is no intention to evade tax as the petitioner has generated E-way bill by declaring the consignee as its additional place of business at No.130, Ring Road Chintamani, Madurai. It is further submitted that ex post facto, i.e., on the date of the petitioner has taken steps for amending the registration by including Sastha Mombalan Modern Rice Mill, 3/237-B, Chintamani Road, Anuppandi, Madurai, Tamil Nadu 625 009 also as the additional place of business.

It is submitted that the imposition of penalty under Section 129 (3) of the CGST and SGST is unwarranted under the circumstances. 4. Opposing the prayer, the learned Additional Government Pleader for the respondent submits that the petitioner has an alternate remedy under Section 107 of CGST Act, 2017/SGST Act, 2017 and therefore there is no merits in this writ petition.

No doubt, the authorities acting under the Act were justified in detaining the goods inasmuch as there is a wrong declaration in the E-way bill. However, the facts indicate that the consignor and the consignee are one and the same entity, namely, Head Office and the Branch Office. In this case, the petitioner has a new place of business, but had not altered the GST Registration. However, steps have been taken to ex post facto include the new place of business altering the GST Registration. The registration certificate has also been amended. 7.

Considering the fact that there is only a technical breach committed by the petitioner and there is no intention to evade tax, I am inclined to quash the impugned order and allow this writ petition by directing the respondent to release the vehicle and the consignment to the petitioner, if the same has not been released already.

Posted on: 01/06/2023

Hon’ble  Calcutta High Court in the case of J.K. Jain Buildtech India Pvt. Ltd. Vs Assistant Commissioner(WPA 3415 of 2022) 

 The question involved in this case was whether an invoice in physical form should accompany a consignment of goods being transported.

The petitioner was penalised for not carrying the invoice in physical form, although e-way bill was accompanying the consignment. The petitioner’s contention was that Rule 138A(1a) does not provide for the production of invoice in physical form and that it would suffice if the person in charge of the conveyance carries the invoice in electronic or digital form.

The petitioner further contended that Rule 138A(1b) specifically used the words “physical form” only in the context of e-way bill and therefore, only the e-way bill has to be carried along with the consignment in physical form.

The Honourable Court observed that the expression used in the heading of Rule 138A is clear that “documents and devices to be carried by a person in charge of the conveyance”, included under sub-Rule(1)(a), the invoice. It also observed that “It is trite that the provision in a taxing statute must be construed strictly, and no benevolent interpretation is available while construing taxing statute. When the said provision specifically provided for those documents and device to be carried by the person-in-charge of a conveyance including the invoice, this clearly means that the invoice has to be carried in physical form and if required shall be produced in its physical form.” The Honourable Court provided an opportunity to the petitioner to produce the physical invoice before the authorities and directed the authorities to adjudicate the matter after considering the invoice so produced. The above judgement lays down in unambiguous terms that an invoice in physical form should mandatorily accompany a consignment of goods being transported.

 However, it may be noted that in the case of an e-invoice, it would suffice if the QR code having the invoice reference number is produced electronically for verification by the proper officer.

Attention is invited to Rule 138(2), which provides as follows:- “In case, invoice is issued in the manner prescribed under sub-rule(4) of rule 48, the Quick Response(QR)code having an embedded Invoice Reference Number(IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice”

Posted on: 01/06/2023

Hon’ble  Calcutta High Court in the case of Ishaan Plastics Pvt. Ltd. & Anr. Vs The Deputy Commissioner of State Tax Bureau of Investigation (South Bengal) Durgapur Zone & Ors.

  The question involved in this case was whether an invoice in physical form should   accompany a consignment of goods being transported.

The petitioner was penalised for not carrying the invoice in physical form, although The Calcutta High Court has directed the refund of the penalty in the case where there was a 9-hour time gap between the expiry of the e-way bill and the interception of the vehicle.

The petitioner/assessee challenged the order of the appellate authority under the WBGST Act confirming the order of the adjudicating authority imposing the penalty for transporting the vehicle in question after the expiry of the e-way bill.

The e-way bill expired on December 27, 2022, at 11.59 p.m., and the vehicle in question was intercepted at 8.37 a.m. on December 28, 2022. There is a time gap between the expiry of the bill and the interception of the vehicle in question of about 9 hours. It was less than a day, and the writ petitioner submits that there was no intention of any evasion of tax on the part of the petitioner.

The court disposed of the writ petition by setting aside the order of the appellate authority and adjudicating authority, and as a consequence, the petitioner will be entitled to a refund of the penalty in question, subject to compliance with legal formalities.

Posted on: 03/11/2023

Hon’ble Supreme Court of INDIA in the case of Vardan Associates Pvt. Ltd. Vs Assistant Commissioner of State Tax Central Section & Ors. Civil Appeal No. of 2023 (@ Special Leave Petition (C) No. 21079 of 2022)

"E-way bill had been generated, and was used mistakenly beyond the validity period, cannot be accepted, much less in taxation matters where the time-period fixed for certain acts by the person, is required to comply with the same is strict, without any discretion either to the person concerned or to the authorities to relax the timelines. The only way going forward was to generate a fresh E-way bill, which has not been done."

Having considered the matter, the Court wishes to confine its consideration only to the quantum of penalty, as was made clear vide order dated 8th December, 2022. It is not in doubt that stricto sensu, the appellant cannot shirk from its responsibility of complying with the requirement in law to generate a fresh E-way bill, if for any reason the consignment had not been transported. However, viewing the factual scenario, which is not disputed, i.e., the appellant is the owner of the consignment and was using it in connection with its contractual obligations in Uttar Pradesh and then having a similar contract in West Bengal and no evidence has been placed on record that shows that the consignment was to be sold/used for any other purpose in respect of any other party, this Court is persuaded to interference. 18. The appellant has been saddled with the tax amount of ₹54,00,000/- (Rupees Fifty four lakhs). The law also provides for imposition of penalty. Ordinarily, we may have refrained from interfering, but because there was an E-way bill that was generated and in view of the discussions made hereinabove, we are inclined to vary the orders passed by the High Court.

In our opinion, ends of justice would be served if the penalty amount is reduced to 50% of the penalty imposed, i.e., ₹27,00,000/- (Rupees Twenty seven lakhs). Therefore, ₹54,00,000/-(Rupees Fifty four lakhs) being the tax imposed, is upheld and penalty would now be ₹27,00,000/- (Rupees Twenty seven lakhs), totalling to ₹81,00,000/- (Rupees Eighty one lakhs), which shall be paid by the appellant. The said amount, subject to payment(s) already made, shall be deposited with the concerned Authority on or before 29th February, 2024. Upon the same being done, the transportation vehicle as also the consignment shall be released to their rightful owners At the same time, the appellant is cautioned to be vigilant in future. 

The appeal stands disposed of in the afore-elucidated terms. It is made clear that this order has been passed under Article 142 of the Constitution of India and shall not be treated as a precedent. Pending application stands disposed of.

Posted on: 03/11/2023

The Hon’ble Allahabad High Court in the case of M/s. Falguni Steels v. State of Uttar Pradesh and Ors. [Writ Tax No. 146 of 2023 dated January 25, 2024] held that mere technical errors, without having any potential financial implications, should not be the grounds for imposition of penalties. The Court emphasized that there must be an intention to evade tax. Therefore, if a penalty is imposed in the presence of all the valid documents, even if an E-Way Bill has not been generated, and there is the absence of any determination to evade tax, the penalty cannot be sustained.

Facts:

M/s. Falguni Steels (“the Petitioner”) was an authorized dealer of the Steel Authority of India Ltd. (“SAIL”). On February 17, 2019, the Petitioner purchased a consignment of TMT Bar by SAIL. The Petitioner obtained the service for transporting its goods through a registered vehicle. The tax invoices dated February 17, 2019 issued by SAIL contained quantity, description of goods and the vehicle number. The E-way bill could not be generated by the transport due to a technical glitch on the portal. Later, these E-way bills were generated on February 20, 2019, and presented to the Assistant Commissioner (“the Respondent-1”), which were not taken into consideration.

The Petitioner submitted that the transportation of the goods on the same day was not possible due to the barrier imposed by the local administration for transportation due to the occasion of “Maghi Purnima, Kumbh Mela, 2019”. Therefore, the goods were transported on February 20, 2019.

On February 21, 2019, the Show Cause Notice was served under FORM GST MOV – 07 (“the Impugned SCN”) to the Petitioner under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (“the UPGST Act”) alleging that the movement of the goods was in contravention to the provisions of the UPGST Act. The Impugned SCN required the Petitioner to show cause as to why tax of an amount of INR 1,29,862/- along with an equivalent penalty of INR 1,29,862/- ought not to be recovered from it.

The Petitioner deposited the amount of INR 2,59,724/- on February 21, 2019, towards tax and penalty, after which the Respondent-1 released the goods by the Order dated February 21, 2019. The Petitioner preferred a statutory appeal before the Assistant Commissioner -Grade 2 (“Respondent-2”).

Respondent-2 upheld the Order dated February 21, 2019, passed by Respondent-1, and confirmed the tax liability and penalty imposed by Respondent No-1 by passing an Order dated October 20, 2019 (“the Impugned Order”).

Hence, aggrieved by the Impugned Order, the Petitioner filed the present writ petition.

Issue: 

Whether Penalty can be imposed on the Assessee in absence of E-way bill if the Tax Authorities prove that there was a mala-fide intention to evade tax?

Held:

The Allahabad High Court in Writ Tax No. 276 of 2020 held as under:

Observed that, the Petitioner had provided all the relevant details before the issuance of the Impugned SCN, and the Respondents failed to record concrete evidence substantiating an intent to evade tax liabilities. The essence of any penal imposition is intrinsically linked to the presence of mens rea and is absent from the record. The intention to evade tax is desideratum for the imposition of penalty. The Impugned Orders were vulnerable to challenge.

Relied on K. Cement Ltd. v. State of Uttar Pradesh. and Others [MANU/UP/2812/2023], Modern Traders v. State of U.P. and Others reported in 2018 SCC OnLine All 6054,M/s. Shyam Sel and Power Ltd. v. State of Uttar Pradesh. and Others [2023: AHC:191074], Axpress Logistics Pvt Ltd. v. Union of India and Others reported in 2018 SCC OnLine All 6089, VSL Alloys (India) Pvt. Ltd. v. State of Uttar Pradesh and Another [2018 SCC OnLine All 6080], the Courts observed that there was no ill intention at the hands of the petitioners therein to evade tax, since the documents accompanying the goods contained all the relevant details. The Courts emphasized the need for a meticulous examination of the facts and circumstances surrounding each case to establish the presence or absence of intentional tax evasion.

Observed that, the reason afforded by Respondent No. 2 that the provisions under the Uttar Pradesh Value Added Tax Act, 2008 (“the UPVAT Act”) mandated establishing a prior intent to evade tax, there was no such provision in the Central Goods and Services Tax Act, 2017 (“the CGST Act”) / the UPGST Act was palpably erroneous. A penal action devoid of mens rea lacks a solid legal foundation and raises concerns about the proportionality and reasonableness of the imposed penalties. The mere rejection of post-detention E-Way Bills, without a cogent nexus to the intention to evade tax, is fallacious. Hence, the Respondents have acted beyond their jurisdiction and imposed tax without there being any cogent reason for the same.

Opined that, mere technical errors, without having any potential financial implications, should not be the grounds for imposition of penalties. The burden of proof, therefore, rests on tax authorities to establish the actual intent to evade tax before imposing penalties on taxpayers. This safeguards individuals and entities from punitive measures arising from honest mistakes, administrative errors, or technical discrepancies lacking malicious intent.

Held that, the requirement of intent to evade tax for the imposition of penalties is a fundamental principle that underpins the fairness and integrity of taxation systems. Recognizing the distinction between technical errors and intentional evasion is essential for maintaining a balanced and equitable approach to tax enforcement. Hence, Respondent- 1 is to refund the amount of tax and penalty deposited by the Petitioner.

Therefore, the Impugned Order was quashed and set aside, and the writ petition was allowed.

In the Pari Materia case, the Hon’ble Calcutta High Court in the case of Ashok Kumar Sureka v. Assistant Commissioner State Tax, Durgapur Range, [Writ Petition Application No.11085 of 2021 dated March 03, 2022] quashed the order imposing a penalty for expiry of the e-way bill as there was no intention to evade tax. The Counsel for the Department could not make out a case against the Petitioner that the aforesaid violation was willful and deliberate or with specific material that the Petitioner intended to evade tax.

Posted on:03/03/2024