The Hon’ble High Court of Kerala vide its order dated 17.08.2022 in the matter of Sanskruthi Motors Vs. The Joint Commissioner Appeals (II), State Goods and Service Tax Department, Eranhipalam, Kozhikode & Another in WP (C) No. – 17223 of 2022, set aside the order imposing demand of tax and heavy/major penalty on the expiry of e-way bill.  It was found that the explanation provided by the assessee with respect to the expiry of E-Way Bill was not considered by the Officer and thus, the demand of tax and major penalty only for the reason that e-way bill has expired is not sustainable and liable to be quashed.

Facts: –

• The petitioner is an entity engaged in the transportation of goods. It has an agreement with M/s.Tata Motors Limited for transportation of commercial and passenger vehicles and chassis to various destinations as required by that Company.
• The Petitioner transported a new tipper lorry on request of Tata Motors from Tamil Nadu to Kozhikode, Kerala, the said vehicle was intercepted and detained by the Assistant Commissioner of the Kerala GST Department and a show cause notice was issued on 09.07.2019 at 12.20 p.m. alleging that the e-way bill expired on 08.07.2019.
• That the petitioner against the said detention moved this court through W.P.(C)No. –19284/2019 and the lorry was directed to be released on furnishing bank guarantee.  However, following the directions of this Court, the said notice was adjudicated and order dated 16.08.2019 was passed imposing penalty of Rs.5,24,017/- along with equivalent demand of IGST making a total demand of Rs.10,48,034/- on the petitioner.
• Later, the appeal preferred by the petitioner against the said order in original was returned, stating that the appeal cannot be entertained as no pre-deposit of 10% of the disputed tax has been made. Being aggrieved the petitioner has moved this petition.

Petitioner’s Submissions: –

• It was submitted on the behalf of the petitioner that there is no justification for imposing penalty in the present case as there is no evasion or suppression of tax. The e-way bill was valid up to 11.59 p.m. on 08.07.2019 and the vehicle was intercepted at 12.20 p.m. (not 12.20 a.m.).
• It was submitted that due to mechanical problem on its way to Kozhikode, the vehicle was taken to workshop, so could not cross the check post on 08.07.2019 and also since the Bandipur Highway was closed during night hours.
• Reliance was placed on the judgment of this Court and the judgment of Madras High Court in WMP (MD) No. 4567/2020, to contend that for minor discrepancies, a major penalty cannot be imposed and in case of technical breach without intent to evade, there is no justification for imposing a heavy penalty under the GST Laws. Reliance was also placed on judgment of Madhya Pradesh High Court in W.P. No. 6118/2021.
• Thereafter, referring to the judgment of Telangana High Court in M/s. Satyam Shivam Papers Pvt.Ltd & Another v. Asst. Commissioner (ST) and others; 2021 SCC OnLine TS 698 : (2021) 50 GSTL 459, it was submitted that the issue involved in the present matter is similar to the issue in Satyam Shivam in which the Court held that when there is a valid explanation for the expiry of the e-way bill and there were no materials to suggest evasion of tax, the power of detention under Section 129 was wrongly invoked and was a blatant abuse of power by the authorities.   Moreover, the Court also imposed cost on the concerned Officer.
• It was also submitted that the Department preferred an appeal against the said judgment in the case of Satyam Shivam before the Hon’ble Supreme Court, which was dismissed through order in SLP(C) No.21132/2021 finding that the High Court acted correctly.

Respondents’ Submissions: –

• The judgment of Division Bench of this Court in Ranjilal Damodaran v. Asst. State Tax Officer and another; 2020 SCC OnLine Ker 23975 was relied upon on the behalf of the respondents, to submit that the petitioner could not have been allowed to continue the transport without extending the validity of the e-way bill as provided under Rule 138 (10) of the CGST Rules. Reliance was also placed on the judgment of the Ld. Single Judge in Podaran Foods India Pvt. Ltd and others v. State of Kerala and others; 2021 (1) KHC 471.
• It was submitted that it is undisputed that at the time of interception or detention, the e-way bill had expired, thus, there is no jurisdiction error or infirmity warranting interference of this Court under Article 226 of the Constitution at this stage of the proceedings.
• Furthermore, the judgment relied upon by the petitioner are not applicable to the facts of the present case and the petitioner has an effective remedy by way of an appeal under Section 107.

Held: –

• The Hon’ble Court after considering the submissions made, facts of the case and the law applicable, found that the petitioner is entitled to succeed in this case and the availability of alternate remedy does not prevent the Court from granting relief as the demand of tax and imposition of major penalty in the given facts of the case, was clearly without jurisdiction.
• The Hon’ble Court considering the findings of the judgment relied upon by the respondents in Podaran Foods India's case (supra) and the judgment of Division Bench of this Court in Renjilal Damodaran's case (supra), found that the findings in the said judgments does not compel me to take a different view taken by the Telangana High Court in Satyam Shivam’s Case (supra,) as the Division Bench has not considered the question as to whether the imposition of a major penalty along with a demand for IGST was justified for the reason that the e-way bill had expired.
• That in the present case it is quite evident that the vehicle was accompanied with an invoice showing value of the vehicle Rs.23,96,505.64 including IGST at Rs.5,24,016.86 as well as accompanied by an e-way bill which was valid up to 08.07.2019, the only discrepancy was that the E-way Bill expired on 08.07.2019, however, no attempt to evade any tax was found.
• It was found by the Hon’ble Court that issue involved in the present case is squarely covered by the judgment of this Court (enclosed as Ext.P.6). Further as noticed by the Telangana High Court in the Satyam Shivam’s case, the officer was duty bound to consider the explanation offered by the petitioner for the expiry of the e-way bill, the explanation provided by the petitioner in the present case has been rejected, stating that there is no evidence of repair of the vehicle has been produced.  Moreover, there is no finding in the impugned order that there was any attempt to evade tax.
• Further the judgment in the Satyam Shivam’s case was challenged before the Supreme Court by the department and the same was dismissed by a speaking order, so there is clearly a merger of judgment of Telangana High Court with the judgment of the Supreme Court. Thus, the view taken by the Telangana High Court is a binding precedent as far as this Court is concerned.

The Hon’ble Court with the above findings quashed the impugned order and remanded the matter to the respondent authority with the directions to consider the amount of penalty to be imposed on the petitioner in the light of the observations of this Court, after affording an opportunity of hearing to the petitioner.

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