Vehicle cannot be detained due to expiry of second e-way bill when first e-way bill is valid

Assistant Commissioner Vs Ashok Kumar Sureka (Calcutta High Court)

The Hon’ble Calcutta High Court in Assisghtant Commissioner State Tax, Durgapur Range, Government of West Bengal v. Ashok Kumar Sureka [MAT 470 of 2022 With I.A. No. CAN 1 of 2022 dated May 12, 2022] affirmed the order passed by the Single Bench allowing the assessee to get the refund of tax and penalty paid under protest, for detention of vehicle due to expiry of the e-way bill. Held that, the Revenue Department could not have intercepted or detained the vehicle in the absence of a second e-way bill as the first e-way bill was valid during the interception period.

Facts:
Ashok Kumar Sureka (“the Respondent”), is the proprietor of Shubham Steel, engaged in the wholesale of metals (“the Goods”).

This appeal has been filed by Revenue Department (“the Appellant”) against the order of the dated March 1, 2022 passed by the Hon’ble Calcutta High Court in W.P.A. No.11085 of 2021, wherein, the Court set aside the order of the Commissioner (Appeals) confirming the Order-in-Original (“OIO”) for detention of the goods, on the grounds of the expiry of the e-way bill and held that the Respondent will be entitled to get the refund of penalty and tax paid under protest subject to compliance of all legal formalities.

The Respondent contended that one of the e-way bill which was raised on September 7, 2019 was valid upto September 9, 2019. Further, another e-way bill expired at midnight on September 8, 2019 since the distance was only 9Km, the e-way bill was valid only for one day. However, the Goods were transported on September 9, 2019 and the delay of few hours was not deliberate and wilful, but due to break down of the vehicle.

The Appellant contended that the Respondent never stated anything about the vehicle being broken down or that non-extension of the validity of the e-way bill was not deliberate and willful. Further, the Court ought not to have allowed the Respondent to get the refund of the tax and penalty paid, by accepting the said argument and granting the relief.

Issue:

Whether the case warranted detention of the vehicle/goods and collection of tax and penalty?

Held:

The Hon’ble Calcutta High Court in MAT 470 of 2022 dated May 12, 2022 with I.A. No. CAN 1 of 2022 held as under:

• Stated that, the bona fides of the Respondent has to be tested on the documents such as tax invoice and e-way bill raised.
• Further noted that, there is no dispute w.r.t. the quantity and description of the Goods and the vehicle number in both the e-way bills is for the same vehicle.
• Observed that the first e-way bill dated September 7, 2019 was valid up to September 9, 2019. Therefore, in the absence of the second e-way bill, the Appellant could not have intercepted or detained the vehicle.
• Noted the, there was no deliberate and wilful attempt on the part of the Respondent to evade payment of tax. Thus relief granted by the Court earlier is fully justified.
• Held that, the Appellant could not have intercepted or detained the vehicle, in absence of second e-way bill, as another e-way bill was valid during the interception period.
• Directed the Appellant to process the application for refund filed by the Respondent.

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FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. This intra Court appeal at the instance of the department is directed against the order dated 1^st March, 2022 in W.P.A. No.11085 of 2021. In the said writ petition, the respondent herein challeged the order passed by the Joint Commissioner (Appeal), CGST and CX, Kolkata Appeal – I Commissionerate dated 18^th March, 2021. The said appeal filed before the Joint Commissioner was directed against the order of demand of tax and penalty in Memo dated 11^th September, 2019 issued by the Assistant Commissioner of State Tax, Durgapur Range and summary of order under reference dated 11^th September, 2019 passed by the Assistant Commissioner of State Tax, Kolkata South.

2. The learned single Bench while noting the fact found that the detention of the vehicle along with the goods and the demand of tax and penalty not to be justified on the ground that the e-way bill, which was being carried in the vehicle transporting the goods had expired on the midnight of 8^th September, 2019 and the goods were being transported on 9^th September, 2019 and the vehicle was intercepted at 1.30 p.m.(noon) and according to the writ petitioner the vehicle transporting goods had broken down and on account of which, there was delay and there was no willful intention to evade payment of tax. The learned single Bench was convinced with the factual position and has disposed of the writ petition by setting aside the order dated 11^th September, 2019 as well as the order of the appellate authority dated 18^th March, 2021 and consequently held that the respondent /writ petitioner will be entitled to get refund of penalty and tax paid on protest subject to compliance of all legal formalities. The department is aggrieved by such order. Hence, this appeal.

3. The learned counsel appearing for the appellant would submit that neither before the appellate authority nor in the pleadings in the writ petition, the respondent had stated anything about the vehicle being broken down or that non-extension of the validity of the e-way bill was not deliberate and willful but due to the circumstances as stated. When such was the factual position, the learned single Bench ought not to have allowed the writ petition by accepting the said argument, which was placed for the first time when the writ petition was moved before the Court.

4. Further, on fact, the learned counsel appearing for the appellant had elaborately referred to the findings recorded by the appellate authority and argued that the learned writ Court ought not to have interfered with the order of demand of tax and penalty.

5. The learned counsel appearing for the respondent / writ petitioner submitted that the bona fides of the writ petitioner has to be considered and this was taken note of by the learned writ Court and relief was granted. In order to show the bona fides of the writ petitioner, the learned counsel had referred to the documents, which formed part of the records of the writ Court, more particularly, the tax invoice raised by M/s. Bhaskar Steel and Ferro Alloy Private Limited dated 7^th September, 2019, e-way bill dated 7^th September, 2019, which was valid upto midnight of 9^th September, 2019 giving the details of the despatch from SRMB Srijan Private Limited to Shubham Steels, the writ petitioner having its registered office in Kolkata. It is further submitted that he writ petitioner had raised a tax invoice in favour of Om Dayal Educational and Research Society, which had its registered office at Kolkata but the goods had to be delivered as per the instruction of the purchaser at Delhi Public School, Sector – 2D, Bidhannagar, Durgapur and in this regard, the writ petitioner had raised a second e-way bill dated 7th September, 2019 since the distance between SRMB Srijan Pvt. Ltd. and the place of delivery was 9 kilometers, the e-way bill was valid upto 8^th September, 2019. Furthermore, it is submitted that the vehicle number in both the e-way bills will clearly show that it is the same vehicle.

6. We have elaborately heard Md. T. M. Siddique, learned advocate for the appellant and Mr. Ankit Kanodia, learned advocate appearing for the respondent.

7. After hearing the learned Advocates for the parties, we are of the view that in the instant case, the bona fides of the writ petitioner has to be tested on the documents, which were available on record. Firstly, we find that the tax invoice has been raised by Bhaskar Steel and Ferro Alloy Pvt. Ltd. dated 7th September, 2019. There is no dispute as regards the quantity and description of the goods. The said vendor had raised the e-way bill dated 7^th September, 2019 as the goods were to be despatched from SRMB Srijan Pvt. Ltd. to the writ petitioner, who had its registered office at Kolkata. The said e-way bill was valid upto 9^th September, 2019 since the approximate distance was about 168 kilometers. The writ petitioner’s case was that they are traders and they had a supply order from Om Dayal Educational and Research Society, which also has its registered office at Kolkata but, however the goods had to be shifted to a  place in Durgapur. Therefore, the writ petitioner raised a second e-way bill on 7^th September, 2019 and since the distance from SRMB Srijan Pvt. Ltd., Durgapur to the Delhi Public School, Durgapur was only 9 kilometers, the e-way bill was valid only for one day, i.e. 7^th September, 2019 to 8^th September, 2019 (midnight).

8. We need not go into the controversy as to whether there was a break down of the vehicle, etc. The case has to be approached by considering the bona fides of the transaction as to whether the case warrants detention of the goods and collection of tax and penalty. Admittedly, the first e-way bill dated 7th September, 2019 was valid upto 9^th September, 2019. Therefore, in the absence of second e-way bill, the tax authorities at Durgapur could not have intercepted or detained the vehicle. Therefore, the explanation offered by the respondent / writ petitioner was an acceptable explanation and a case cannot be made out that there was a deliberate and willful attempt on the part of the respondent / writ petitioner to evade payment of tax so as to justify invocation of the power under Section 129 of the Act.

9. Thus, we are of the view that the relief granted by the learned writ Court is fully justified. However, we substantiate the said conclusion by the reasons which we have assigned to the preceding paragraphs.

10. In the result, the appeal and the application filed by the department are dismissed and the appellant is directed to process the application for refund filed by the respondent on 7th March, 2022 and orders be passed thereon in terms of the direction issued by the learned writ Court within a period of two weeks from the date of receipt of the server copy of this judgment and order.

11. We make it clear that we have examined the facts of the case on hand, the bona fides of the respondent / writ petitioner and then arrived at a conclusion that it is not a case of willful attempt to evade payment of tax and therefore, the decision having been rendered on the peculiar facts cannot be treated as a precedent.

12. Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.