2022 (1) TMI 954 - SCH - GST

Quantum of cost imposed by High Court on the GST officer - intent to evade tax or not - allegation that the e-way bill had expired a day earlier - traffic blockage due to agitation - abuse of power by the officer - HELD THAT - On the facts of this case, it has precisely been found that there was no intent on the part of the writ petitioner to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioner. When the undeniable facts, including the traffic blockage due to agitation, are taken into consideration, the State alone remains responsible for not providing smooth passage of traffic. The High Court has awarded costs to the writ petitioner in the sum of ₹ 10,000/- in relation to tax and penalty of ₹ 69,000/- that was sought to be imposed by the petitioner No.2. In the given circumstances, a further sum of ₹ 59,000/- is imposed on the petitioners toward costs, which shall be payable to the writ petitioner within four weeks from today - Petition dismissed.

Summary

Issues:
Interpretation of tax evasion based on expired e-way bill, abuse of power by tax authority, imposition of costs by the High Court, enhancement of costs by the Supreme Court.

Interpretation of Tax Evasion:
The Supreme Court upheld the High Court's decision in a case involving an expired e-way bill, emphasizing that the mere expiry of the bill does not imply tax evasion. The High Court found the tax authority's conclusion baseless and arbitrary, highlighting the lack of evidence of tax evasion. The Court criticized the tax authority's failure to consider valid explanations for the delay in delivery due to external factors beyond the taxpayer's control, such as traffic blockages.

Abuse of Power by Tax Authority:
The High Court condemned the tax authority's abuse of power in imposing tax and penalties without sufficient evidence of tax evasion. It questioned the authority's conduct in detaining goods and collecting taxes without proper justification, leading to undue harassment of the taxpayer. The Court emphasized the need for authorities to act fairly and reasonably, avoiding arbitrary actions that violate constitutional principles.

Imposition and Enhancement of Costs:
While the High Court set aside the tax and penalty imposed on the taxpayer, it awarded nominal costs, which the Supreme Court deemed insufficient given the circumstances. The Supreme Court enhanced the costs payable by the petitioner to the respondent, emphasizing the need to deter frivolous litigation and compensate the aggrieved party adequately. The Court clarified that the State could recover the costs from the responsible party directly after payment to the respondent.

Conclusion:
The Supreme Court dismissed the petition, affirming the High Court's decision but enhancing the costs imposed on the petitioner to compensate the respondent for unnecessary litigation. The judgment underscores the importance of fair treatment, proper interpretation of tax laws, and discouraging abuse of power by tax authorities. It highlights the need for authorities to act reasonably, consider valid explanations, and ensure adequate compensation for those wronged by arbitrary actions.