In a recent judgment pronounced by the Punjab and Haryana High Court, Justices G.S. Sandhawalia and Harpreet Kaur Jeewan noted that the act of utilising E-way bills and tax invoices again suggests a deliberate effort to avoid making proper tax payments and upheld the penalty imposed by the First Appellate Authority of GST.
The bench observed that the Intention to evade payment of tax is an essential ingredient for initiating proceedings against a person under section 130 of the Central Goods and Services Tax Act (CGST Act), 2017.
The assessee, M/s Bright Road Logistics, is involved in the road transportation of goods. The truck carrying the taxpayer’s shipment carrying goods of mixed scrap i.e. copper, aluminium and bead scrap was intercepted and detained by the Assistant Excise and Taxation Officer- cum- Proper Officer using the authority granted by Section 68 (3) of the CGST Act, 2017, in conjunction with Section 68(3) of the Haryana GST Act, 2017, and Section 20 of the Integrated GST Act. This action was carried out through the issuance of a seizure memorandum.
While dealing with the provisions of Section 129 and 130 of the CGST Act, 2017, the appellate authority observed that it is a case of reuse of documents with mala-fide intention to evade tax with legitimate due tax to the Government. The goods were not covered with genuine documents.
The impugned order passed by the Proper Officer demanding the tax and imposing the penalty was held legal by the appellate authority while observing ‘Hiding the truth and tendering falsehood are as per se existence of mens rea to evade the tax due to the State’.
This fact was noticed that as per the record, the petitioner is a habitual tax offender. Another vehicle of the petitioner was also penalized by another AETO (Enf.) Gurugram, wherein, the tax amounting to Rs.14,74,595 and penalty under Section Section 129(1) of the CGST Act was imposed.
The counsel of the petitioner submitted that the vehicle was moving along with invoices and e-way bills issued by the dealer as per the GST rules and no deficiency was found in the documents as such the detention and confiscation of the vehicle and the material was illegal.
Raising the aforesaid submissions, it was contended that the order of demanding tax and imposition of penalty are illegal.
Regarding the quashing of the impugned order passed by the first appellate authority, the bench observed that the quantity of the scrap mentioned in the documents produced by the driver vary from the quantity of the documents which was being carried at the time of interception of the vehicle, as such keeping in view a long delay in between the date of issuance of the e-way bills to the date of interception of the vehicle, the appellate authority has rightly held that it was a case of reuse of the documents.
Further noted that the appellate authority while passing the impugned order has considered the reasons recorded by the proper officer and concluded that it is a case of reuse of documents with a mala-fide intention to evade the legitimate due tax to the Government of Coffers.
The Rule 138 of the CGST Act, 2017 provides that every registered person who causes movement of goods and consignment value of exceeding Rs.50,000/- shall before commencement of said movement, generate e-way bill by way of furnishing information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal.
According to the High Court, the Section 129(6) of CGST Act, 2017 provides that where a person transporting any goods or owner of the goods fails to pay amount of tax and penalty as provided in sub-section 1 of section 129 within a period of 14 days of the detention and seizure of the vehicle, the proceedings under Section 130 of CGST Act, 2017 shall be initiated.
However, in the present case, the payment was not made, as such the Proper Officer was authorized to initiate the proceedings under section 130 of the CGST Act for confiscation of the goods or conveyance and for levy of penalty.
Apart from this, the provisions of section 130 of the Act provides that where any person supplies any goods in contravention of any provisions of the Act or the Rule made therein with an intention to evade the tax, he is liable to be proceeded under section 130 of the CGST Act, 2017.
While dismissing the appeal, the Punjab and Haryana High Court clearly stated that “‘Intention to evade payment of tax’ is an essential ingredient, for initiating proceedings against a person under section 130 of the said Act. In the present case, the petitioner had tried to reuse the e-way bills and the tax invoices, as such the intention to evade the payment of tax is impliedly proved on record. Hence, the order passed by the Proper Officer under Section 129 as well as under Section 130 of the CGST Act, 2017 read with the provisions of IGST Act, 2017 is legal and valid and has been rightly upheld by the appellate authority.”
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