2021 (1) TMI 1091 - HC - GST

Seizure of Goods - allegation of reuse of E-way bills - Since the e-way bills were not cancelled and the transportation of the goods commenced four days thereafter, it has been inferred that the said e-way bills had been reused - HELD THAT - Rule 138(9) of the Rules does not prescribe that the dealer must necessarily cancel the e-way bill if no transportation of the goods is made within 24 hours of its generation. It certainly does not provide any consequence that may follow if such cancellation does not take place. On the contrary, the Rule permits a dealer to cancel the e-way bill only if the transportation does not take place and the dealer choses to cancel such e-way bill within 24 hours of its generation. Even if the dealer does not cancel the e-way bill within 24 hours of its generation, it would remain a matter of inquiry to determine on evidence whether an actual transaction had taken place or not. That would be subject to evidence received by the authority. As such it was open to the seizing authority to make all fact inquiries and ascertain on that basis whether the goods had or had not been transported pursuant to the e-way bills generated on 24.11.2019. Since the petitioner-assessee had pleaded a negative fact, the initial onus was on the assessing authority to lead positive evidence to establish that the goods had been transported on an earlier occasion. Neither any inquiry appears to have been made at that stage from the purchasing dealer or any toll plaza or other source, nor the petitioner was confronted with any adverse material as may have shifted the onus on the assessee to establish non-transportation of goods on an earlier occasion - the presumption could not be drawn on the basis of the existence of the e-way bills though there did not exist evidence of actual transaction performed and though there is no statutory presumption available. Also, there is no finding of the assessing authority to that effect only. Mere assertion made at the end of the seizure order that it was clearly established that the assessee had made double use of the e-way bills is merely a conclusion drawn bereft of material on record. It is the reason based on facts and evidence found by the assessing authority that has to be examined to test the correctness of the order and not the conclusions, recorded without any material on record. Though the petitioner-assessee has also disputed the correctness of the additional evidence, that issue is not required to be gone into in the present case - the order passed by the appeal authority is erroneous, being contrary to the provisions of law. The appeal authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order. The proper authority, had not recorded any reason to establish evasion of tax or attempt to evade tax or even reuse of the documents by the petitioner. Though he raised that issue in the seizure proceedings, he did not record any finding that effect in the final order dated 3.12.2019 passed under Section 129(3) of the Act. He simply rejected the explanation furnished by the assessee without recording any reason and consequently imposed tax and penalty. No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case that too after being aware of the defense set out by the assessee in the first leg of the proceedings. The order dated 3.12.2019 passed by the proper authority under Section 129(3) of the Act is found to be perverse and is set aside - Petition allowed.

Summary

Issues:
Challenge against order confirming tax and penalty demand; Interpretation of Rule 138(9) of the Central Goods and Service Tax Rules, 2017; Entertaining additional evidence at the appeal stage.

Analysis:
The judgment concerns a petition challenging an order confirming a tax and penalty demand. The petitioner, a trader, sold goods to a dealer in West Bengal, and the goods were intercepted by revenue authorities. Initially, an allegation of reusing e-way bills was made, but no such finding was recorded in the final order. The appeal against the order was dismissed, partly due to additional evidence indicating delayed transportation of goods, leading to the inference of e-way bill reuse.

The petitioner argued that Rule 138(9) does not mandate automatic e-way bill cancellation if goods are not transported promptly. Additionally, the appeal authority erred in allowing new evidence, contrary to Rule 112, which only permits additional evidence by the appellant. The petitioner emphasized that the original order's reasoning should not be supplanted at the appeal stage, citing legal precedent.

The respondent contended that failure to cancel e-way bills indicated double transportation of goods, supported by new evidence. However, the Court noted that Rule 138(9) does not specify consequences for not canceling e-way bills within 24 hours. The Court highlighted that the assessing authority failed to establish through evidence that goods were transported twice, shifting the onus to the authority.

The judgment emphasized that conclusions must be based on factual evidence, not assumptions. It clarified that appeal authorities cannot introduce fresh evidence at the respondent's instance, as it violates legal principles. The Court found the appeal authority's actions erroneous and set aside the order, noting the lack of findings on tax evasion or document reuse. Remanding the case was deemed unnecessary, and any deposited amount was to be returned to the petitioner.

In conclusion, the petition was allowed, highlighting errors in the appeal authority's actions and emphasizing adherence to legal procedures and evidence-based decision-making.