21.09.2022: Another Opportunity To Present The Case Granted When There Is No Intent To Evade Tax – E-Way Bill – Delhi High Court

The Hon’ble High Court of Delhi vide its Order dated 23.08.2022 in the matter of Nirmal Kumar Mahaveer Kumar Vs. Commissioner of Central Goods and Service Tax and Another in W.P. (C) – 8585/2022, finding that there was no intent to evade payment of tax and the only reason for which the demand was raised was the expiry of E-way Bill at the time of interception of vehicle, provided another opportunity to the asseesee for establishing its case when the first opportunity could not be availed of by him.

The Petitioner filed the Writ petition before the Hon’ble High Court challenging the Order dated 31.12.2021 passed by the Respondent Appellate Authority, whereby the demand of tax and penalty imposed by the Respondent adjudicating authority was upheld.

Held: –

  • The Hon’ble Court after considering the submissions made and the facts of the case, found that it appears that the proceedings were initiated under Section 129(3) of the CGST Act, 2017, by the respondents.  The tax demand raised was Rs. 2,33,100/- and the equivalent penalty (at the rate of 100%) was imposed.
  • It appears that the impugned demand was raised on the ground that the E-way bill which was valid till 28.09.2020, had expired at the time of interception on 29.09.2020 at 3:40 A.M., and was no longer valid.
  • The Hon’ble Court after perusal of two E-way bills on record and after considering the submissions made on the behalf of the petitioner that ‘since the earlier vehicle had broken down, another vehicle was arranged for transporting the goods’, found that the petitioner did not ask for extension of time for completion of journey, as a result, the E-way bill was found expired at the time of interception.
  • That for the said reason, a show cause notice dated 30.09.2020 under Section 129(3) of the CGST, Act 2017, was issued to the petitioner in FORM GST MOV – 07, mentioning the proposed tax and penalty on the allegation that ‘goods not covered by valid documents. ‘
  • Further, it was noticed by the Hon’ble Court that the petitioner paid the amount of tax demanded and the penalty imposed on the same date on which it was made i.e.,30.09.2020, so that the goods could reach the designated destination at the earliest.
  • Later, the petitioner did not avail of the opportunity to explain its case that as to why the goods could not reach their destination before the expiry of E-way Bill. However, it is not in dispute that the tax stands paid and the impugned demand was raised only on the basis that e-way bill was not valid at the time of interception.
  • It was found by the Hon’ble Court that the impugned demand includes not only the payment of tax, but also penalty, and it is not a case where the intent of the petitioner is to evade tax. Therefore, petitioner needs to be given another opportunity to establish, as to why the subject goods did not reach their designated designation before the expiry of the e-way bill.

The Hon’ble Court with the above findings set aside the impugned order dated 31.12.2021 and the remanded the matter back to the respondents, to take a fresh decision in the matter after providing opportunity to produce the relevant documents/evidence to establish its case.  The Concerned Officer while carrying out this exercise, will also keep in mind the provisions of Section 126 of the Act, which states about omission or mistake in documentation which is easily rectifiable.

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