2024 (2) TMI 481 - HC - GST

Levy of penalty - Part B of E-Way Bills was not filled up - presumption for evasion of tax or not - existence of mens rea or not - HELD THAT - The crux of the issue herein is that the petitioner explained the reason of non filling up of Part B of the E-Way Bills to the authorities. However, the authorities have not considered the explanation and rejected the same on the basis of only the factual aspect that the distance between Delhi and Meerut is about 75 kilometers. The presumption that has been made by the authorities that there was intention to evade tax is based only on the factual matrix that the distance between Delhi and Meerut is only about 75 kilometers, which could have allowed the petitioner to carry out multiple trips. In my view, no other material has been brought on record by the authorities to indicate that there was any mens rea on the part of the petitioner to evade tax. The reason of presumption of evasion of tax is without any basis in law, and accordingly, the order of detention and subsequent appellate order are illegal and required to be set aside. The order levying penalty and order dated May 18, 2019 are quashed and set-aside - The writ petition is allowed.

Summary

Issues involved:
The issues involved in the judgment are the imposition of penalty based on non-filling of Part B of E-Way Bills without intention to evade tax, rejection of explanation provided by the petitioner, and the presumption of tax evasion based on distance traveled.

Imposition of Penalty based on non-filling of Part B of E-Way Bills:
The petitioner supplied goods after charging IGST but did not fill up Part B of the E-Way Bills initially due to miscommunication between transporter and driver. The deficiency was later rectified before interception. Despite this, the authorities passed a detention order and demanded tax and penalty. The petitioner explained the reason for non-filling, but the authorities rejected it solely based on the distance between Delhi and Meerut, presuming tax evasion. The court held that the presumption was baseless as there was no mens rea to evade tax, and all other details matched between the invoice and goods transported. The order of detention and subsequent appellate order were deemed illegal and set aside.

Rejection of Explanation provided by the petitioner:
The petitioner provided a detailed explanation for the non-filling of Part B of E-Way Bills, which was rejected by the authorities. The rejection was based solely on the distance between Delhi and Meerut, assuming multiple trips for tax evasion. The court found no other evidence of mens rea to evade tax and noted that all other details matched between the invoice and goods transported. The authorities failed to consider the explanation provided by the petitioner, leading to an unjust imposition of penalty.

Presumption of Tax Evasion based on Distance Traveled:
The authorities presumed tax evasion based on the distance between Delhi and Meerut, without concrete evidence of intention to evade tax. The court emphasized that orders under Section 129 of the Act should be based on investigation and not mere surmises. As there was no basis in law for the presumption of tax evasion, the penalty levied and the appellate order were quashed and set aside. The respondents were directed to return the security to the petitioner within four weeks.