GST: It cannot be said that Taxpayer was Evading tax merely because the e-way bill has expired due to Traffic Jam

The consideration of the High court in the order impugned and the material placed on record leaves nothing to doubt that the attempted inference on the part of petitioner No.2, that the writ petitioner was evading tax because the e-way bill had expired a day earlier, had not only been baseless but even the intent behind the proceedings against the writ petitioner was also questionable, particularly when it was found that the goods in question, after being detained were, strangely, kept in the house of a relative of the petitioner No.2 for 16 days and not at any other designated place for their safe custody.

The High Court has, inter alia, found that:

“41. ……It was the duty of 2nd respondent to consider the explanation offered by the petitioner as to why the goods could not have been delivered during the validity of the e-way bill, and instead, he is harping on the fact that the e-way bill is not extended even four(04) hours before the expiry or four (04) hours after the expiry, which is untenable.

The 2nd respondent merely states in the counter affidavit that there is clear evasion of tax and so he did not consider the said explanations.

This is plainly arbitrary and illegal and violates Article 14 of the Constitution of India because there is no denial by the 2nd respondent of the traffic blockage at Basher Bagh due to the anti CAA and NRC agitation on 4.01.2020 up to 8.30 pm preventing the movement of auto trolley for otherwise the goods would have been delivered on that day itself. He also does not dispute that 04.01.2020 was a Saturday, 05.01.2020 was a Sunday, and the next working day was only 06.01.2020.”

The High Court has further found and, in our view, rightly so thus:

“42. How the 2nd respondent could have drawn an inference that the petitioner is evading tax merely because the e-way bill has expired, is also nowhere explained in the counter-affidavit.

In our considered opinion, there was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner merely 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 an 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 the petitioner or the auto trolley driver, no presumption can be drawn that there was an intention to evade tax”.

Conclusion

The High Court has meticulously examined the case and correctly concluded that there was no fault or intent to evade tax on the part of the assessee – there was no intent on the part of the assessee to evade tax, and rather, the goods in question could not be transported to the destination within the timeframe due to circumstances beyond the writ petitioner’s control. When the undeniable facts, such as the traffic jam caused by agitation, are considered, the State is solely responsible for the lack of smooth traffic flow. – In light of the Officer’s overall conduct and the resulting harassment suffered by the assessee, the Court finds it necessary to increase the amount of costs.

The High Court has awarded the assessee costs in the amount of Rs. 10,000/- in relation to the tax and penalty of Rs. 69,000/- that the Officer sought to impose – a further sum of Rs. 59,000/- is imposed on the petitioners toward costs, which must be paid to the assessee within four weeks from today. This would be in addition to the sum of Rs. 10,000/- previously ordered by the High Court – the State would be entitled to recover the costs directly from the person/s responsible for this wholly unnecessary litigation after paying the writ petitioner – the petition is dismissed.

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