M/S Satyam Shivam Papers Pvt. Ltd. vs Asst. Commissioner St And 4 Others
2021 Latest Caselaw 1530 Tel

     HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO

                                        AND


           HONOURABLE SRI JUSTICE T.VINOD KUMAR


                        Writ Petition No.9688 of 2020

ORDER :      (Per Sri Justice M.S.Ramachandra Rao)



        The petitioner is a Private Limited Company registered under

the Companies Act, 1956, and carries on trading business in all kinds

of paper. It is also registered under the CGST Act, 2017, SGST Act,

2017 and IGST Act, 2017 on the rolls of the Assistant Commissioner

(ST),    Osmanganj,         Circle,     Charminar    Division,   Hyderabad

(for short, 'the 1st respondent).

2. According to petitioner, it is the sole distributor of

M/s.International Papers Limited, Andhra Pradesh, and it also effects

inter-State purchases of papers from M/s. Emami Papers Ltd., Orissa

and receives supplies of paper from these two companies and submits

monthly GST returns on-line and also pays GST payable under the

CGST and SGST Act, 2017.

3. Petitioner contends that it made an intra-State supply of paper

through a tax invoice dt.04.01.2020 (Ex.P.2) to M/s. Sri Ayappa

Stationery and General Stores, Station Road, Medchal in Telangana

State which is also registered under the GST Act and had also

generated an e-way bill dt.04.01.2020 (Ex.P.3). According to it, the ::2:: MSR,J & TVK,J wp_9688_2020

goods were delivered to a transporter for making delivery to the

consignee by an auto trolley bearing No.TS 07 UF 1008.

4. Petitioner contends that the auto trolley started for delivery of

the paper at 04:33 p.m. on 04.01.2020 to the consignee, but on its

way, on account of a political rally being conducted by certain

political parties opposing Citizenship Amendment Act (CAA) and

National Register of Citizens (NRC), traffic was blocked at

Basheerbagh, Hyderabad, that the road got jammed from all corners

and the auto trolley could not move forward or backward. Petitioner

alleges that this continued till 08:30 p.m. and by that time, the shop of

the buyer could be closed, and so the auto trolley driver took the

trolley to his residence with the goods so as to deliver them on the

next working day.

5. 04.01.2020 was a Saturday, and 5.1.2020 was a Sunday, and

the next working day was 06.01.2020.

6. Petitioner contends that on 06.01.2020, the auto trolley was on

its way for delivery of the paper to the buyer/consignee but it was

detained by the Deputy State Tax Officer, Bowenpally-II, Circle,

Begumpet Division (for short, '2nd respondent') at Tadbund at 12:35

p.m.; and a Detention Notice in Form GST MOV-07 dt.06.01.2020

(Ex.P.4) was served alleging that the validity of the e-way bill had

expired proposing to impose tax and penalty.

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7. It was further alleged by the petitioner that the 2nd respondent

unloaded the paper boxes at a private premises in the house of 2nd

respondent's relative's at Marredpally, Secunderabad without

tendering any acknowledgment of receipt of detention of the goods in

his custody, and released the auto trolley by unloading the goods in

such a manner. Petitioner alleges that this action of the 2nd respondent

is arbitrary and illegal and he could not have taken physical

possession of the goods in such a manner.

8. Petitioner alleges that it made representation on 07.01.2020 to

the 2nd respondent (Ex.P.5) and sought for release of the detained

goods by explaining reasons which resulted in expiry of the e-way

bill. He also submitted representation on 08.01.2020 by enclosing

copy of the Rule 138 of the CGST Rules, 2018 wherein the validity

period of the e-way bill for more than 20 kms can be extended for one

more additional day and also enclosed copy of the decision rendered

by the Allahabad High Court in Writ Tax No.1471 of 2018.

9. Petitioner further alleges that the 2nd respondent received the

said letter dt.08.01.2020, but did not acknowledge receipt of the same

and did not also release the goods.

10. Petitioner alleges that he waited for release of the detained

goods till 19.01.2020 and since it did not seem likely that the 2nd

respondent would release the goods in spite of submitting explanation

for release, it made payment of (i) Rs.17,250/- under CGST Act, ::4:: MSR,J & TVK,J wp_9688_2020

(ii) Rs.17,250/- under SGST Act, (iii) Rs.17,250/- towards penalty

under CGST Act and (iv) Rs.17,250/- towards penalty under SGST

Act through NEFT, amounting to Rs.69,000/-, and also submitted a

letter dt.20.01.2020 in the office of the 1st respondent (Ex.P.7).

According to petitioner, some of the paper packets in the boxes had

also gone missing in the mean time.

11. Petitioner further alleges that the 2nd respondent passed an order

on 22.01.2020 in Form GST MOV-09 ignoring the representations

submitted by petitioner on 07.01.2020 and 08.01.2020 and also the

decision of the Allahabad High Court, and mentioning that petitioner

admitted that tax and penalty are payable, which is factually incorrect

since the petitioner had never admitted the same.

12. According to petitioner, only after payment of the amount of

Rs.69,000/- on 22.01.2020, release order was issued by the Senior

Assistant attached to the Office of the 2nd respondent.

13. Petitioner also alleges that the impugned order has been passed

by the Senior Assistant on behalf of the 2nd respondent and he is not

authorized to pass such an order.

Counter-affidavit of 2nd respondent:

14. Counter-affidavit was filed by 2nd respondent stating that he

was authorized by the Joint Commissioner (ST), Begumpet Division

to conduct vehicular checks; that three vehicles including the vehicle

bearing No.TS 07 UF 1008 were stopped by him and the documents ::5:: MSR,J & TVK,J wp_9688_2020

were checked and since the e-way bills were valid only up to

05.01.2020 12:00 a.m. and were not valid on 06.01.2020 when the

checking was done by him, he was entitled to detain them; and that

the drivers of the auto trolleys expressed ignorance of the expiry of

the e-way bill.

15. The 2nd respondent further quoted Rule 138(10) of the GST

Act, 2017 which extended the validity of an e-way bill for one

additional day and contended that the distance from the destination

was less than 100kms and so the e-way bill was valid only for an extra

24 hrs; that such extension can be made four hours before expiry or

four hours after expiry, but the e-way bill of petitioner was not so

extended.

16. He further contended that though there were three vehicles

there was only one e-way bill mentioning the vehicle

No.TS 07 UF 1008 and the numbers of the other two vehicles, viz.,

AP 09 Y 2935 and TS 13 UB 6441, were written manually on the

e-way bill which the drivers acknowledged.

17. It was further contended by the 2nd respondent that on

06.01.2020, there was rain and due to non-cooperation of the drivers,

the 2nd respondent's staff ensured the safety of the goods under CCTV

camera surveillance. The 2nd respondent further stated he received the

letter dt.08.01.2020 enclosing the judgment of the Allahabad High

Court, and stated that he did not follow it because in the instant case ::6:: MSR,J & TVK,J wp_9688_2020

there was a clear evidence of evasion of tax. Thereafter, certain

provisions of the GST and the Rules framed thereunder were quoted

in extenso.

18. The 2nd respondent also stated that the goods were kept in the

premises of a known person on 06.01.2020 because it was a rainy day.

19. He stated that he had applied for leave for four days and in his

absence, on the request of petitioner, he directed his Senior Assistant

to release the vehicle by signing the release order; and that such

release was done in order to ensure that there is no further delay in

delivery of goods to the dealer.

20. It was also alleged that to cover up the failure of the dealer to

extend the validity of the expired e-way bill, the dealer made self-

serving statements which did not prove his bona fides.

21. It was stated that petitioner had approached the 2nd respondent

on 18.01.2020 which was a Saturday, and on 20.01.2020, the

following Monday, the dealer had remitted the tax and penalty; and on

22.01.2020, the payment details were furnished by him and so release

orders were issued.

22. It was also stated that as per the Act, a dealer can extend the

validity of an e-way bill in Part-B and the same can be sent even to

the driver's mobile phone, but the dealer willfully did not do so, and

expiry of the e-way bill cannot be treated as a technical mistake. He

justified the levy of penalty and tax on the petitioner in this manner.

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Reply-affidavit of petitioner :

23. Reply-affidavit was filed by petitioner refuting the allegations

leveled by 2nd respondent.

24. The petitioner contended that the 2nd respondent did not

disclose the proceedings number through which the Joint

Commissioner (ST), Begumpet Division, Hyderabad authorized him

to conduct the check of vehicles and he did not even file it along with

the counter-affidavit.

25. The petitioner further contended that though there were four

auto trolleys, one of which had reached the destination and delivered

the paper boxes, the remaining three trolleys could not deliver the

paper on 04.01.2020 due to CAA and NRC rallies at Bashierbagh,

Hyderabad. It stated that they started on 06.01.2020 for delivery of

goods before the expiry of the e-way bill period, and hence the

detention notice issued is illegal and bad in law.

26. Petitioner further alleges in this reply-affidavit that the

detention notice dt.06.01.2020 is signed by the Assistant

Commissioner (C.T.O.), but, the first page of the detention notice

mentions the 2nd respondent's name as the first person who

intercepted it.

27. It is also stated that the 2nd respondent admitted that he did not

sign the release order as he was on leave and there is no provision

under the Act to sub-delegate the powers to the 2nd respondent.

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28. It was also contended that the 2nd respondent's plea that

petitioner has admitted the payment of tax and penalty is absurd,

baseless and high-handed, and he did not look into the replies

submitted by petitioner. It is stated that there is no document in which

the petitioner had admitted liability to pay the tax and liability. It was

also stated that the representations given by petitioner in fact show

that petitioner never gave consent to pay tax and penalty.

29. The petitioner also contended that there was no evidence of

evasion of tax and pointed out that validity of the e-way bill is

different from evasion of tax, and the 2nd respondent should have

noted the distinction between the two.

30. It was also stated that the 2nd respondent could not have kept

the goods in his relative's house, and such a course of action is not

permissible under the Act. It was also denied that 06.01.2020 it was a

rainy day.

31. Petitioner also alleged that withholding of the goods was

permissible only for three days under the Act and the 2nd respondent

was duty-bound to bring it to the notice of the Joint Commissioner

who allegedly authorized him to detain them, but 2nd respondent could

not have detained them for more than 16 days; and that such an action

is without the authority of law.

32. According to petitioner, the e-way bill had a validity up to

12:00 p.m. on 06.01.2020, and so, withholding the auto trolley beyond ::9:: MSR,J & TVK,J wp_9688_2020

12:00 a.m. and issuing detention notice at 12:35 p.m. on 06.01.2020 is

contrary to law.

33. It was further alleged that the office of 2nd respondent is at

Marredpally, Hyderabad. It was also further contended that before

issuing release order of the goods, the office of 2nd respondent

obtained acknowledgment from the driver that they received the entire

stock so as to escape liability for loss of goods while they were in

custody of the 2nd respondent.

34. The petitioner further alleged that for minor mistake of expiry

of e-way bill which is beyond the control of petitioner company, it

cannot levy such tax and penalty particularly when there is no dispute

raised by the 2nd respondent about the holding of political rally

opposing the CAA and NRC at Bashierbagh, Hyderabad on

04.01.2020 resulting in traffic jam; and that the 2nd respondent also

did not dispute that the consignee's shop would be closed by 08:30

p.m. on 04.01.2020. According to him, there was no occasion to levy

penalty because the 2nd respondent failed to prove any mens rea on the

part of petitioner , that penalty proceedings are quasi criminal in

nature and reliance is placed on the decision of Andhra Pradesh in

Delta Lubricants, Vijayawada vs. Deputy Commercial Tax

Officer1.

35. We have noted the submissions of both sides.

    43 APSTJ 27
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Consideration by the Court :

36. The admitted facts are that petitioner had dispatched goods on

the auto trolley bearing No.TS 07 UF 1008 on 04.01.2020 and the

driver of the auto trolley had in his possession tax invoice (Ex.P.2)

dt.04.01.2020 as well as e-way bill (Ex.P.3) dt.04.01.2020, and that

the distance to be traveled by the auto trolley was only 36 kms.

37. Petitioner alleges that the said auto trolley along with other auto

trolleys started for delivery of the paper at 04:33p.m. on 04.01.2020 to

the consignee, but on its way to Bashierbagh since there was a

political rally opposing CAA and NRC by political parties, the roads

were blocked and the traffic could not move forward or backward;

that the driver of the said auto trolley waited till 08:30 p.m. on the

road; by that time having realized that the shop of the buyer would be

closed, the driver of auto trolley took the goods to his residence with a

desire to deliver the goods on the next day. The following day

5.1.2020 being a Sunday, the attempt was made by the driver of the

auto trolley to deliver them to the buyer on 6.1.2020 when it was

detained at 12.35 pm by issuing detention notice dt.06.01.2020.

38. Though according to 2nd respondent, there were three auto

trolleys which were detained, the present Writ Petition is confined

only to the auto trolley bearing No.TS 07 UF 1008 carrying paper

weighing 4366 kgs. which is clearly mentioned in the e-way bill.

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39. Therefore, we are not concerned with the story set-up by the 2nd

respondent about the other two auto trolleys which were also detained

by him on 06.01.2020 along with the auto trolley No.TS 07 UF 1008

nor expressing any view thereon.

40. As rightly contended by counsel for petitioner, Form GST-

MOV-07 (notice under Section 129(3) of the CGST Act) on 4.1.2020

to petitioner mentions on the first page, the name and description of

the 2nd respondent as the proper officer who detained the vehicle, but

on the last page thereof the rubber stamp of the Assistant

Commissioner Tax Officer is mentioned. This is not explained by the

2nd respondent.

41. Secondly, petitioner gave representation on 07.01.2020 to the

1st respondent and handed over a copy of the same to the 2nd

respondent on 08.01.2020 explaining about obstruction to the

movement of the auto trolley on account of rally conducted in the city

of Hyderabad on 04.01.2020 preventing the vehicle from reaching its

destination on that day.

The order of demand of tax and penalty in From GST MOV-07

issued on 22.01.2020 is signed by the Senior Assistant attached to the

Office of 2nd respondent, and not by the 2nd respondent, by wrongly

stating therein that petitioner had no objection to pay proposed tax and

penalty in spite of the petitioner giving representations on 08.01.2020

and 20.01.2020 to the contrary.

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Why the 2nd respondent has not chosen to refer to these two

explanations offered by petitioner is nowhere mentioned in the

counter-affidavit filed by 2nd respondent.

It was the duty of 2nd respondent to consider the explanation

offered by petitioner as to why the goods could not have been

delivered during the validity of the e-way bill, and instead he is

harping on the fact that the e-way bill is not extended even four (04)

hours before the expiry or four (04) hours after the expiry, which is

untenable.

The 2nd respondent merely states in the counter affidavit that

there is clear evasion of tax and so he did not consider the said

explanations.

This is plainly arbitrary and illegal and violates Article 14 of

the Constitution of India, because there is no denial by the 2nd

respondent of the traffic blockage at Basher Bagh due to the anti CAA

and NRC agitation on 4.1.2020 up to 8.30 pm preventing the

movement of auto trolley for otherwise the goods would have been

delivered on that day itself. He also does not dispute that 04.01.2020

was a Saturday, 05.01.2020 was a Sunday and the next working day

was only 06.01.2020. .

42. How the 2nd respondent could have drawn an inference that

petitioner is evading tax merely because the e-way bill has expired is

also nowhere explained in the counter-affidavit.

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In our considered opinion, there was no material before the 2nd

respondent to come to the conclusion that there was evasion of tax by

the petitioner merely on account of lapsing of time mentioned in the

e-way bill because even the 2nd respondent does not say that there was

any evidence of attempt to sell the goods to somebody else on

06.01.2020. On account of non-extension of the validity of the e-way

bill by petitioner or the auto trolley driver, no presumption can be

drawn that there was an intention to evade tax.

43. We are also unable to understand why the goods were kept for

safe keeping at Marredpally, Secunderabad in the house of a relative

of 2nd respondent for (16) days and not in any other place designated

for such safe keeping by the State.

44. In our opinion there has been a blatant abuse of power by the

2nd respondent in collecting from the petitioner tax and penalty both

under the CGST and SGST and compelling the petitioner to pay

Rs.69,000/- by such conduct.

45. We deprecate the conduct of 2nd respondent in not even

adverting to the response given by petitioner to the Form

GST MOV-07 in Form GST MOV - 09, and his deliberate intention

to treat the validity of the expiry on the e-way bill as amounting to

evasion of tax without any evidence of such evasion of tax by the

petitioner.

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46. In this view of the matter, the Writ Petition is allowed; the order

dt.22.01.2020 passed by the Senior Assistant of the 2nd respondent in

Form GST MOV - 09 and levying tax and penalty of Rs.69,000/- on

the petitioner, is set aside. The respondents are directed to refund the

said amount collected from petitioner within four (04) weeks with

[email protected] 6% p.a from 20.1.2020 when the amount was collected

from petitioner till date of repayment. The 2nd respondent shall also

pay costs of Rs.10,000 to the petitioner in 4 weeks.

47. As a sequel, miscellaneous petitions pending if any in this Writ

Petition, shall stand closed.

____________________________ M.S.RAMACHANDRA RAO, J

___________________ T.VINOD KUMAR, J

Date: 02.06.2021 Ndr