No Fraudulent Intention Established: Gujarat High Court Quashes Penalty

The Gujarat High Court has held that the department could not establish any element of tax evasion with fraudulent intent or negligence.

The division bench of Justice Sonia Gokani and Justice Mauna M. Bhatt has observed that the delay was of almost 4 1⁄2 hours before the e-Way bill could expire. It appeared to be bonafide and without establishing any fraudulent intention.

The petitioner/assessee is a transport authority, which goes by the name and style of "Shree Ram Road Carriers."

The petitioner has challenged the authority of the department in demanding the sum of Rs. 7,53,364 as a demand for tax and penalty under Section 129(3) of the Central Goods and Services Tax Act, 2017.

The petitioner contended that the truck had remained in non-motorable condition. As a result, the goods that were to be delivered on or before October 17, 2022, could not be delivered on time, and on October 19, 2022, at the time of inspection, the officer discovered that the entire truck, along with the goods, had been seized due to the expiration of the e-Way bill number. The petitioner was issued GST Form MOV No.1,2,6, and 7, in which he was required to remain present, and an order of 4.11.2022 was eventually issued demanding the tax and penalty.

The department justified the detention of the goods with an invoice value of Rs. 24,69,358 along with conveyance on the ground that the e-Way bill had expired 41 hours before the time of interception. The period between the expiration of the validity of the e-Way bill and the time of interception was not substantiated, and no justification was offered by the conveyance driver. There was no satisfactory reason for the non-update of the e-Way bill that was given.

The court ruled that the detention was justified because the goods were subject to the expiration of the e-Way bill number, which had expired during transit, and that this could not be used to detain and seize MS Billet and the vehicle truck.

The court quashed the order demanding the sum of Rs. 7,53,364. The order of detention as well as the notice issued under Section 129(3) of the Act dated October 19, 2022, were also quashed and set aside.

Case Title: Shree Govind Alloys Pvt. Ltd.

Citation: 2022 LiveLaw (Guj) 411

Date: 01/12/2022

Counsel For Petitioner: Advocate Hemal Shah

Counsel For Respondent: Asst. Government Pleader Pooja Ashar

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