Evasion Of Tax Cannot Be Attributed To Transporter When Consignor Accepts Error In Loading Goods: Allahabad High Court

Certain goods were intercepted in transit from Dehradun to Delhi. After notices were issued to the cosigner/ consignee, the goods were released in their favour. Subsequently, an order alleging intention to evade tax under Section 129 of the GST Act was passed against the petitioner who was merely a transporter of the goods. Appeal against the penalty order was also dismissed.

Challenging the orders before the High Court, petitioner argued that once the goods were released in favour of the owner, no adverse inference could be drawn against the transporter regarding intention to evade tax.

The Court observed that during interception certain shortfall was found in the quantity of goods, for which proceedings had been initiated against the owner of the goods. It was observed that the owner had stated that due to the fault of the labour, less good were loaded and the owner had cleared the penalty amount.

Justice Piyush Agrawal held

“No finding has been recorded that the transporter, i.e., the petitioner, is engaged in the business of purchase and sale of any goods. Once the consignor come forward with the case that due to human error of the labourer, less goods were loaded at night, the evasion of tax cannot be attributed to the petitioner, who is a transporter.”

The Court held that there was no material against the petitioner-transporter and once the goods had been released in favour of the owner, no proceedings could be initiated against the petitioner.

Accordingly, the writ petition was allowed.