2024 (1) TMI 1150 - HC - GST

Evasion of tax - Failure to produce the e-Way Bill in time due to certain technical difficulties - whether or not there was any actual intent to evade tax on part of the petitioner? - HELD THAT - In the case of VSL Alloys (India) Pvt. Ltd. v. State of U.P. and Another 2018 (5) TMI 455 - ALLAHABAD HIGH COURT , while dealing with a situation where Part- B of the e-Way Bill was not generated, this Court observed that the petitioner therein was supposed to fill up Part- B of the e- Way Bill giving all the details including the vehicle number before the goods were loaded in a vehicle, and it failed to do so. However, there was no ill intention at the hands of the petitioner therein to evade tax, since the documents accompanying the goods contained all the relevant details. In the instant case before me, although the petitioner failed to generate the e-Way Bill on time, the Tax Invoices issued contained all the relevant details including the detail of the vehicle transporting the goods. Moreover, the CGST and the SGST were already charged by SAIL. Therefore, no intention to evade tax is evident in this case. In the present factual matrix, it is clear that the goods were accompanied by the tax invoices. Furthermore, the tax invoices contained the details of the vehicle that was transporting the goods. It is further to be noted that one e-Way Bill was generated before the detention and one subsequent to the detention, but before passing of the order under Section 129(3) of the UPGST Act, 2017/CGST Act, 2017. Under these circumstances, there does not appear to be any intention to evade the tax - the petitioner cannot be made to suffer due to mere technical mistakes that may have arisen, without there being any intention to evade tax. The impugned orders in the instant case are a result of the Respondent No. 2 and the Respondent No. 3 exceeding their jurisdiction and not proceeded in accordance with the essential requirement of the law where it was meant to adminiter. Therefore, a writ of certiorari is warranted in the instant case. Accordingly, let there be a writ of certiorari issued against the order dated February 21, 2019 passed by the Respondent No. 2 and the order dated October 20, 2019 passed by the Respondent No. 3. The said orders are quashed and set aside - Petition allowed.

Summary

Issues Involved:
1. Validity of the penalty order under Section 129(3) of the UPGST Act, 2017.
2. Examination of the intention to evade tax.
3. Adherence to principles of natural justice.
4. Jurisdictional errors by the authorities.

Summary:

Validity of the Penalty Order:
The petitioner, M/s Falguni Steels, challenged the orders dated February 21, 2019, and October 20, 2019, passed by the Assistant Commissioner, Commercial Tax, and the Additional Commissioner, Grade - 2, respectively. The petitioner contended that the e-Way Bills were generated before the issuance of the Show Cause Notice and the passing of the order under Section 129(3) of the UPGST Act, 2017. However, these e-Way Bills were not considered by the authorities, leading to the imposition of tax and penalty.

Intention to Evade Tax:
The petitioner argued that there was no intention to evade tax as the goods were accompanied by valid tax invoices, and the CGST and SGST were already charged by SAIL. The court referred to several precedents, including *VSL Alloys (India) Pvt. Ltd. v. State of U.P.*, *M/s. Shyam Sel and Power Ltd. v. State of U.P.*, and *Modern Traders v. State of U.P.*, emphasizing that the intention to evade tax is a mandatory criterion for invoking Section 129(3) of the CGST Act, 2017. The court concluded that there was no intention to evade tax in this case as the goods were accompanied by all relevant documents, including tax invoices and e-Way Bills.

Principles of Natural Justice:
The petitioner claimed that the ex-parte order passed by the Respondent No. 3 violated the principles of natural justice as it was passed in haste and without considering the petitioner's arguments. The court noted that the authorities failed to provide a reasoned order and did not consider the petitioner's explanation regarding the delay in generating the e-Way Bill due to local administrative barriers. The court emphasized that penalties should not be imposed for mere technical errors without any intention to evade tax.

Jurisdictional Errors:
The court found that the authorities exceeded their jurisdiction by imposing tax and penalty without any cogent reason indicating an intention to evade tax. The court highlighted that the essence of any penal imposition is linked to the presence of mens rea, which was absent in this case. The court referred to the principles governing the issuance of a writ of certiorari, noting that it is issued to correct errors of jurisdiction and procedural irregularities that impact the fairness and legality of the proceedings.

Conclusion:
The court quashed the impugned orders dated February 21, 2019, and October 20, 2019, and directed the Respondent No. 2 to refund the amount of tax and penalty deposited by the petitioner within four weeks. The writ petition was allowed, and the court emphasized that penalties should be proportionate to the gravity of the offense and should not be imposed for technical errors without any intention to evade tax.