The Allahabad High Court ruled that it is obvious that the only breach is a technical one wherein the E-Way Bill was not present in the vehicle while quashing the Goods and Services Tax (GST) SCN and Penalty Order for alleged tax evasion.
For transporting goods without an E-Way Bill the petitioner’s vehicle was intercepted directing to a penalty under the presumption of tax evasion. Before the interception of the vehicle, the GST e-way bill was downloaded. Even after this, a hard copy of the e-way bill during interception was not produced by the driver, leading to a technical breach.
On the exact day, the SCN along with the penalty order was issued depicting that no chance of hearing was provided before the applicant to furnish his response. The same is a gross breach of the principles of natural justice.
For the applicant, the Advocate Suyash Agrawal appeared, and the respondent-GST Authorities were represented by the Standing Counsel Arvind Kumar Mishra.
On behalf of the petitioner the counsel Suyash Agrawal, appeared and made the below submissions-
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On May 21, 2019, at 08:38 am the petitioner downloaded the E-Way Bill for the goods in question, and on the exact day at 08:52 am the interception took place which denotes the E-Way Bill was downloaded before the interception of the goods.
The applicant who received the SCN, a 7-day time limit was cited to respond however without waiting for 7 days and without providing a chance of hearing to the applicant, respondent No. 2 passed the penalty order illegally.
In documentation, the minor mistake was without any fraudulent purpose or gross negligence and was later rectified via downloading the E-Way Bill. This applicant’s minor mistake is protected u/s 126 (1) of the Central Goods and Services Tax Act.
As cited under rule 138 (A) (b) of the Central Goods and Services Tax Rules, the incharge person of a conveyance will carry an E-Way Bill copy in physical form or an E-Way bill number in electronic form.
However the driver of the vehicle cannot furnish a hard copy of the E-Way Bill to respondent No. 2, yet he told respondent No. 2 about the E-Way bill number.
It furnished that as the e-way bill was downloaded before the interception of the goods and the driver of the vehicle informed respondent No. 2 of the e-way bill number, respondent No. 2 was unjustified in passing the penalty order.
The invoice along with the e-way matched with the goods in the vehicle, inferring that no mens rea (intention) for tax evasion was there.
Checking the genuineness of the e-way bill number has failed under the respondent authorities as reported via the driver from the GST portal and did not furnish a chance of hearing to the applicant which was against the principles of natural justice.
The presence of mens rea for tax evasion is a sine qua non for the levying of penalty. Consequently, the impugned show cause notice and penalty order were quashed and set aside, and the writ petition was authorized, Allahabad High Court Bench of Justice Shekhar B. Saraf ruled.
The respondent authorities are asked to refund the tax amount and penalty deposited by the applicant within four weeks from this judgment date.
| Case Title | M/S Mid Town Associates vs Additional Commissioner Grade-2 (Appeal) |
| Citation | WRIT TAX No. – 433 OF 2020 |
| Date | 09.05.2024 |
| For the Petitioner | Suyash Agrawal, Advocate |
| For the Respondent | Arvind Kumar Mishra, Standing Counsel |
| Allahabad High Court | Read Order |
