Expiry of e-way bill cannot be presumed as intention to evade tax?

This post is about the decision of the Hon’ble Telangana High Court with regards to the expiry of the e-way bill. Recently, the said High Court passed a very important decision on the e-way bill and it is going to clear confusion about the impact of the expiry of e-way bill on tax aspects among a lot of taxpayers and other tax representatives.

The Hon’ble high court set aside the order passed by the Revenue Department in the case of Satyam Shivam papers Pvt. Ltd. V. Assistant Commissioner ST & Ors, which states about the imposition of penalty on the Assessee due to expiry of the e-way bill.

Facts of the Case: – Satyam Shivam (“the petitioner”) is a company engaged in the business of all kinds of paper. On January 4, 2020, the petitioner made an intra-state supply of paper and generated an e-way bill, and dispatched the goods. Due to some political rallies, goods could not be delivered so driver kept all the goods to his residence with an intention to deliver goods on next morning. But, on January 6, 2020, the trolley was detained by the Deputy State Tax Officer “the respondent” and notice was served to the petitioner alleging that the e-way bill had expired. In consequence of the above, on January 22, 2020 order has been issued to the petitioner for payment of a penalty of Rs. 69,000.

The decision of the Hon’ble High Court

The Hon’ble High Court held that it is the responsibility of the respondent to consider the explanation offered by the petitioner for non-delivery of goods on time. In this case, there was no material before the Respondent to prove that there was evasion of tax by the petitioner.

Consideration of the expiry of the e-way bill as an intention to evade tax is completely arbitrary and illogical. The Hon’ble court stated that there has been an abuse of power by the Respondent in collecting the tax and penalty from the Petitioner.

It has been held that no presumption can be drawn that there was an intention to evade tax on account of the expiry of the validity of the e-way bill by the petitioner.