No tax evasion can be presumed on mere non-extension of validity of e-way bill due to traffic blockage

The Supreme Court has ruled that a business cannot be presumed to have evaded tax simply because an e-way bill's validity expired due to traffic blockages. The court found no intention to evade tax when goods were delayed for reasons beyond the assessee's control, such as traffic congestion caused by agitations. The Revenue Department was criticised for detaining goods and was ordered to pay significant costs to the assessee.

The Hon'ble Supreme Court of India in Assistant Commissioner ST & Ors. v. Satyam Shivam Papers Pvt. Ltd. [Special Leave to Appeal (C) No(s). 21132/2021 dated January 12, 2022] affirmed the judgment passed by the Hon'ble Telangana High Court and held that, tax evasion cannot be presumed on mere non-extension of validity of e-way bill by the assessee due to traffic blockage and agitation, for which the Revenue Authority is responsible for not providing smooth passage of traffic. Further, imposed a sum of INR 69,000/- on the Revenue Department towards the cost payable to the assessee, and to be recovered, directly from the persons responsible.

Facts

This petition has been filed by the Revenue Department (“the Petitioner”), being aggrieved of the judgment passed by the Hon'ble Telangana High Court in Satyam Shivam Papers Pvt. Ltd. v. Assistant Commissioner ST & Ors. [Writ Petition No. 9688 of 2020 dated June 2, 2021] wherein, the Court set aside the order passed by the Petitioner in Form GST MOV-09, imposing tax and penalty on Satyam Shivam Papers Pvt. Ltd. (“the Respondent”) due to the expiry of the e-way bill and deprecated the Petitioner for blatant abuse of power in detaining goods by treating validity of the expiry on the e-way bill as amounting to evasion of tax compelling the Petitioner to pay INR 69,000/- by such conduct. It was held that, no presumption can be drawn that there was an intention to evade tax on account of non-extension of the validity of the e-way bill by the Respondent. Further, directed the Petitioner to refund the amount collected from the Petitioner with interest @6% p.a. and imposed fine of INR 10,000/- payable to the Respondent.

The Petitioner contended that, the questions of law is involved in the matter w.r.t. the operation and effect of Section 129 of Central Goods and Services Tax Act, 2017 (“the CGST Act”) and violation by the Respondent.

Issue

Whether there involves a question of law in the matter as contended by the Petitioner?

Held

The Hon'ble Supreme Court of India in Special Leave to Appeal (C) No(s). 21132/2021 dated January 12, 2022 held as under:

• Noted that, the Hon'ble High Court had meticulously examined and correctly found that no fault or intent to evade tax could have been inferred. Further, the amount of costs as awarded is rather on the lower side, considering the overall conduct of the Petitioner and the harassment faced by the Respondent.
• Observed that, there was no intent on the part of the Respondent to evade tax and the goods could not be taken to the destination within time, for the reasons beyond the control of the Respondent, including the traffic blockage due to agitation, for which the Petitioner alone is responsible for not providing smooth passage of traffic.
• Opined that, there is no question of law nor the question of fact involved in the matter and the petition filed by the Respondent has been misconceived.
• Enhanced and imposed a further sum of INR 59,000/- on the Petitioner the amount toward costs, payable within 4 weeks, over and above the sum of INR 10,000/- already awarded by the Hon'ble Telangana High Court.
• Clarified that the amount of costs, to be recovered, directly from the person/s responsible for such entirely unnecessary litigation.