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28 January 2022

Expiry of validity of E-Way bill due to genuine reasons, like traffic blockage enroute, cannot solely amount to evasion of GST

The Hon’ble Supreme Court vide Order dated 12 January 2022 in the matter of Assistant Commissioner (ST) & Ors. v. Satyam Shivam Papers (P.) Ltd. & Anr. in Special leave to Appeal (C) No. (s) 21132 of 2021 upheld the order passed by the Hon’ble Telangana High Court in Writ Petition No. 9688 of 2020 setting aside tax demand and penalty for expiry of e-way bill when goods could not be delivered within the validity period because of traffic blockage. Also, Apex Court enhanced the penalty levied by Hon’ble High Court on the GST officer from Rs. 10,000/- to Rs. 69,000/-.

A consignment started for movement on 04.01.2020 (Saturday) from Respondent (M/s Satyam Shivam Papers Pvt. Ltd.) to the consignee, but on its way, on account of a political rally being conducted by certain political parties opposing CAA and NRC, traffic was blocked and the road got jammed from all corners and the vehicle carrying consignment could not move forward or backward. This continued till 08:30 p.m. on that day and by that time, the shop of the buyer got closed, and so the vehicle’s driver took the trolley to his residence with the goods so as to deliver them on the next working day. Next working day was 06.01.2020 (Monday) and while on its way, vehicle was detained by Deputy State Tax Officer, Bowenpally-II, Circle, Begumpet Division and detention notice was served alleging that e-way bill is expired proposing to impose tax & penalty. Further, goods were stationed at a relative’s house of the GST officer conducting the enquiry without tendering any acknowledgement of receipt of detention of the goods in custody.

Hon’ble High Court of Telangana held that there is no evasion of tax when consignment could not be delivered on 04.01.2020 due to genuine reasons which goes undisputed by the GST officer. Merely not extending the validity of e-way bill by the Respondent does not prove any intent of evasion of GST without any material evidence that there was any evidence of attempt to sell the goods to somebody else on 06.01.2020.

Further, it was held that there is a blatant abuse of power by the GST officer by keeping the goods at his relative’s residence and not considering Respondent’s genuine reasons/submissions for which a cost of Rs. 10,000/- was imposed by the Hon’ble High Court.

Department thereafter challenged the Hon’ble Telangana High Court’s Order. Apex Court now after considering the submissions and the aforesaid order of the Hon’ble Telangana High Court held that there is no reason to interfere in the well-considered and well-reasoned order dated 2nd June 2021 passed by the High Court, however error if any, on the part of the High Court, had been imposing only nominal penalty Rs. 10,000/- on the Respondent No. 2 (Petitioner No. 2 in Supreme Court) which was enhanced to Rs. 69,000/- by the Hon’ble Supreme Court.