Non-extension of the validity of e-way bill, does not pre-supposes that there was an intention to evade tax

Facts of the Case:- In this case, the petitioner generated e-way bills for transporting of the contracted goods. The e-way bill generated by the petitioner no. 1 remained valid up to 12th May, 2023, 11.59 P.M. Unfortunately, before the consignment could reach its destination, the e-way bill which remained valid till 11.59 P.M., of 12th May, 2023 expired.

Consequently, the goods in question were intercepted on 13th May, 2023 before the validity of the said e-way bill could extended by the petitioners. The department after physical verification of goods, passed detention order u/s 129(3) for the reason that “goods not covered by valid documents”, followed by a show-cause notice issued under Section 129(1) of the said Act. The petitioner then got the goods released on payment of penalty in terms of Section 129(1)(b). However, penalty order u/s 129(3) was passed.

The petitioner’s appeal before the appellant authority against penalty order u/s 129(3) was dismissed merely on the ground that they do not found any reasons to interfere with the adjudicating order.

Submission of Petitioner:- The only fault of the petitioners was to get the validity of the e-way bill extended within the prescribed time. Reliance placed upon  the judgment of Kerala High Court in the case of Hindustan Steel and Cement N. H. Karimbilangadi v. Assistant State Tax Officer, wherein it was held that  payment of penalty under Section 129(1) (a) or (b) of the said Act does not absolve the adjudicating authority from passing an order under Section 129(3) of the said Act. Also, by relying on the judgment in the case of Pushpa Devi Jain versus Assistant Commissioner of Revenue, Bureau of Investigation, it is submitted that unless there is willful delay, the petitioners cannot be made responsible and no penalty could have been thrust on the petitioners in terms of Section 129(3) the said Act. Therefore, in the instant case, there was no deliberate and willful default on the part of the petitioners to extend the validity of the e-way bill as such the respondents ought not to have imposed the penalty.

Submission of Department:- The Department submitted that even though the e-way  bill in the present case had expired on the date when the vehicle-in-question along with the goods were intercepted, it is immaterial whether there is mens rea attached. By placing reliance on the Supreme Court’s judgment delivered in the Vardhan Associates Pvt. Ltd. v. Assistant Commissioner of State Tax Central Section & Ors. Vide CIVIL APPEAL NO. 8302 OF 2023 dated 31.10.2023, where the Supreme Court observe that the appellant cannot shirk from its responsibilities to comply with the requirement of law to generate e-way bill. Further, reliance placed upon judgment in the case of Asian Switchgear Private Limited, wherein it was held that the department stands relieved of the burden of proof of mens rea or motive in respect of a statute imposing penalty as a civil obligation for violating a tax regime.

Held:- The High Court noted that no other allegation apart from the expiry of the e-way bill is noted by the department. The Court stated that simply because there was no extension of the e-way bill, the same does not pre-supposes that there was an intention to evade tax. There is no finding either by the adjudicating officer or by the appellate authority as regards the intent of evasion of tax. There appears to be no material available to conclude evasion of Tax.

Further, in the case Supreme Court as relied upon by the department, the observations made by the Hon’ble Supreme Court in the said judgment are in relation to a challenge as regards payment of tax and penalty and not in relation to the factum of presumption being drawn on the intention to evade tax on the non-extension of the validity of the e-way bill.

The Court set aside the order passed u/s 129(3), by considering that the goods were intercepted within 24 hours from the expiry of the validity of the e-way bill, including there being no material on record to show that the petitioners were involved in evasion of tax and the peculiar facts of the case.

To read the complete judgment 2024 Taxo.online 864