Delay in Delivery after Expiry of E-Way Bill will not be presumed as GST Evasion

The Honourable Supreme Court has ruled that non-delivery of goods within the validity period of e-way bill and non-extension of e-way bill will not necessarily amount to evasion of tax, especially when the delay is caused due to external factors.

Facts of the Case

This incident dates back to the days when CAA-NRC protest were rampant across states in India. Paper distributors M/s/ Satyam Shivam Papers Pvt. Ltd. generated an e-way bill dated Saturday, 4/1/2020 to make an intra-state supply. The transporter departed from the distributor’s for the place of supply on the next working day, Monday, 6/1/2020, but got stuck in heavy traffic caused due to political rallies opposing CAA and NRC.

The transporter was forced to turn his vehicle to his residence. He moved towards the place of delivery the next day but was detained by a Deputy State Tax Officer, who served a detention notice and imposed tax and penalty stating the following:

1. The driver unloaded the goods at his private residence.

2. The e-way bill had expired.

3. The respondents were trying to evade tax.

Held

It is worth noting that Rule 139 of the CGST Rules, 2018, says that the validity of an e-way bill for more than 20 kms can be extended by a day.

The matter was taken to the Telangana High Court, which eventually imposed a fine of Rs. 10,000 on the Revenue Department.

Further, the Supreme Court concurred with Telangana High Court’s decision and found the Deputy Sales Tax Officer’s claims to be baseless.

The Apex Court inferred that the respondent had no intention of evading tax and the delay in delivery was rightfully caused due to heavy traffic, a circumstance that is beyond an individual’s control. Also, it was found that the Offer had kept the goods at his relative’s place after detaining them. This raised further suspicion on the part of the Deputy Sales Tax Officer.

Ultimately, the Court decided that the concerned Officer pay Rs. 59,000 over and above the fine of Rs. 10,000 to the respondent for the harassment caused and the unnecessary litigation.