The Allahabad High Court ruled that the absence of tax invoices and/or e-way bills during interception and their next production does not forgive the taxpayer from the obligation of penalty under the Goods and Service Tax Act.
“Production of these documents after the interception cannot absolve the petitioner from the liability of penalty as the very purpose of imposing penalty is to act as a deterrent to persons who intend to avoid paying taxes owed to the Government,” Justice Shekhar B. Saraf stated.
The Court ruled in the absence of tax invoices and/or e-way bills with the goods in transit, the responsibility to verify that there was no intent to evade tax shifts on the taxpayer. The Court ruled that in the absence of these documents with the goods in transit, it could be presumed that there was an intent to evade tax on the taxpayer’s portion until proved otherwise.
The court mentioned that “This Court in umpteen cases where penalties were being imposed under Section 129 of the Act though held that an intention to evade tax should be present, however, in the event the goods are not accompanied by the invoice or the e-way bill, a presumption may be raised that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods.
Applicant’s goods were not accompanied by an E-Way Bill, invoice, and ability during interception. Before the authorities, the documents were produced after interception.
Trusting the decision of the Allahabad High Court in M/s Axpress Logistics India Private Limited v. Union of India and others and M/s Modern Traders v. State of U.P. and others, counsel for the petitioner contended that as long as the documents were produced before the passing of the detention order there is no penalty can be levied on him. It was contended that no intent to evade tax had been established by the Department.
Respondent’s counsel contended that after April 2018, the goods in transit needed to be accompanied by the e-way bill. As the goods were neither accompanied by the GST e-way bill nor the tax invoice and the ability, the obligation to verify no intent to evade tax had shifted from the department to the taxpayer, it furnished.
The Court ruled that not holding e-way bills and invoices could not be treated as a technical or clerical error. In the same cases, the burden to prove no intention to evade tax is on the taxpayer and not the department.
As per the court, the production of such documents post interception of the goods does not forgive the taxpayer’s liability to pay a penalty. The Court ruled that levy of penalty to prevent people from tax evasion.
The court said at the time of dismissing the writ petition filed by the taxpayer. “It is clear that if the goods had not been intercepted, the Government would have been out of its pocket concerning the GST payable on the said goods,”
| Case Title | M/S Akhilesh Traders Vs. State Of U.P |
| Citation | WRIT TAX No. – 1109 of 2019 |
| Date | 20.02.2024 |
| Petitioner by | Pranjal Shukla |
| Respondent by | C.S.C. |
| Allahabad High Court | Read Order |
