Blog No. 61: Intention to evade GST be assumed merely on the ground of expiry of e-way bill?

Where E-Way Bill had expired and authority detain the conveyance as well as goods on the ground that the E-Way bill has expired, there cannot be an intention to evade the payment of taxes. Therefore, detention in such cases is not warranted. The detaining officer, at max, can ask either the supplier or the recipient to submit an undertaking and forward the same to the jurisdictional officers so that the same can be considered by him at the time of doing assessment.

Read more about the order dated 01.12.2022 passed in the case of Shree Govind Alloys Pvt. Ltd. Versus State of Gujarat reported as 2022 (12) TMI 298 below:

Fact of the case

1. The truck had remained in non-motorable condition and thus, the goods which were to be delivered could not be delivered in time.
2. At the time of inspection, because of the expiration of the e-Way bill number, the officer seized the goods as well as conveyance.

Issue before the court

3. Petitioner challenged the authority of the respondent demanding the sum of Rs. 7,53,364/- as demand of tax and penalty under section 129(3) of the Central Goods & Services Tax Act, 2017.

Legal Provisions of the Act

4. As per Section 129 of CGST Act, 2017, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure.
5. The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice.

Decision of the Court

6. The Court in the case of Govind Tobacco Manufacturing Co. vs. State of U.P. reported as (2022) 140 taxmann.com 383 (Allahabad) held that as there is expiry of E-Way bill in transit, the seizure of said vehicle and the goods is not permissible under the law.
7. Hon’ble High Court of Madhya Pradesh at Jabalpur in the case of M/s. Daya Shaker Singh vs State of Madhya Pradesh, Writ Petition No.12324 of 2022, intervened considering the fact that the respondent could not establish any element of evasion of tax with fraudulent intent or negligence on the part of the petitioner. In said case, delay was of almost 4 ½ hours before the e-Way bill could expire which appeared to be bonafide and without any fraudulent intention.
8. Resultantly, present petition was allowed. The impunged order demanding the sum of Rs 7,53,364/- was quashed and set aside. The order of detention as well as the notice issued under section 129(3) of the Act were also quashed and set aside.

Paksh Remarks

9. Earlier Hon’ble Tripura High Court in case of Podder & Podder Industries Private Limited vs. The State of Tripura and others reported as 2022 (4) TMI 122, court granted the relief where there is no doubt that a transaction is made between two registered dealers and discovered by the necessary documents including the e-way bill even if the e-way bill has expired just prior to the date of entry into the State. Hon’ble Court held that such goods ought not to be stopped, and instead an undertaking should be taken from the buyer or the seller and intimation should be provided to the assessing officer.