2021 (8) TMI 1179 - HC - GST

Seeking release of detained machinery - Expired E-Way bill - machines used in the business of dealing - detention on the ground that the excavator had no registration in the State of Tripura which was violative of Section 192A of the Motor Vehicles Act - HELD THAT - The department does not dispute that the petitioner has collected the necessary GST on the sale of machinery as indicated in the sale invoice. There is no allegation of such tax not being deposited with the Government revenue. The department is not in a position to dispute that the vehicle did arrive at Churaibari check post carrying proper e-way bill and within the validity period of the e-way bill. The validity expired on account of unforeseen and unexpected delay in crossing the check post since the transport department stopped the movement of the vehicle on the ground that the machinery was not registered in the State of Tripura. This issue was cleared when the transport department imposed a fine of ₹ 10,000/- which the petitioner paid. This process, however, took more than 24 hours and in the meantime, the validity of the e-way bill expired. Though the petitioner generated a new e-way bill, the GST department of the State was not prepared to accept it. Allowing the department to detain the machinery would be wholly impermissible. The fault of the petitioner if at all is rather technical. The machinery costs nearly half a crore of rupees on which the Government revenue has already earned substantial tax. Detaining such machinery at the check post would expose it to deterioration particularly in the present season of heavy rainfall - the tax authorities must make a clear distinction between deliberate tax evasion and technical or minor defects which manifest no intention to evade tax. When the IGST liability has been fully discharged, no intention can be attributed on part of the petitioner to evade tax. The respondents shall release the transport vehicle and the machinery in question forthwith. The learned counsel for the respondents shall communicate this order telephonically to the respondents to enable this release - petition allowed.

Summary

Issues:
Release of detained machinery at check post due to tax and e-way bill issues.

Analysis:
The petitioner, a company dealing in TATA Hitachi Construction Machinery, sold an excavator to a buyer in another state. The machinery was being transported with a valid e-way bill but was detained at a check post in Tripura. The authorities detained the vehicle first for lack of registration in Tripura and later for an expired e-way bill. The petitioner paid a fine, but the GST authorities refused to accept a new e-way bill. The authorities issued a show-cause notice for unpaid tax and penalty. The petitioner approached the High Court seeking release of the machinery.

The High Court found that the petitioner had collected and declared the necessary GST on the sale, and there was no dispute regarding tax deposition. The vehicle had a valid e-way bill, which expired due to delays caused by the authorities. The Court noted that the fault was technical, and detaining the machinery would be impermissible. The Court highlighted the substantial tax already paid and the potential harm due to detention, considering the value of the machinery and inconvenience to the buyer. The Court emphasized the distinction between deliberate tax evasion and technical defects, indicating no intent to evade tax in this case.

The Court directed the authorities to release the machinery immediately and instructed the petitioner to file an undertaking to deposit any tax or penalty liability upon final assessment. The petitioner was given time to respond to the show-cause notice, and the Assessing Officer was directed to consider the Court's observations while passing the final assessment order. The Court emphasized the provisional release of machinery under the GST regime and the need to exercise such powers in appropriate cases. The judgment balanced the interests of the petitioner, tax authorities, and buyer, ensuring compliance while preventing undue harm due to technical issues.