Summary / Headnotes
Held - The Supreme Court upheld the Telangana High Court’s finding that mere expiry of an e-way bill by a day did not establish intent to evade tax, particularly when traffic blockage due to anti-CAA/NRC agitation, weekend holidays, and absence of any attempt to divert goods were undisputed facts. The Court also endorsed the High Court’s view that keeping the detained goods for 16 days at the house of a relative of the officer, rather than at a designated location, was a blatant abuse of power, and that the officer’s failure to consider the taxpayer’s explanation in the GST MOV proceedings was arbitrary and violative of Article 14. Finding the petition misconceived and noting the harassment caused, the Court held that the ₹10,000 costs imposed by the High Court were inadequate, enhanced them by ₹59,000 (total ₹69,000), directed payment within four weeks, and allowed the State to recover the amount from the responsible officer(s) (Paras 2 to 5 & 8 to 11).
Petition dismissed
AI Summary of the Case
Question Answered
Issue 1: Whether expiry of the e-way bill by one day, without extension, amounts to proof of intent to evade tax?
Views: The Court upheld the High Court’s finding that mere expiry of the e-way bill does not, by itself, establish intent to evade tax. The facts—such as traffic blockage due to anti-CAA/NRC agitation, weekend non-working days, and absence of any attempt to sell goods elsewhere—showed no evidence of evasion. The inference of evasion was baseless (Paras 2 to 4 & 8).
Issue 2: Legality of detaining goods for 16 days at a relative’s house instead of a designated custody location.
Views: The Court endorsed the High Court’s view that keeping detained goods at a relative’s house for 16 days was improper and constituted a blatant abuse of power by the officer. This action undermined lawful procedure and suggested mala fide conduct (Para 2 & 5).
Issue 3: Arbitrary disregard of the taxpayer’s explanation in GST MOV proceedings.
Views: The officer failed to consider the explanation given in response to Form GST MOV-07 before issuing Form GST MOV-09. The Court held this disregard was arbitrary, illegal, and violative of Article 14, as genuine and undisputed circumstances preventing delivery were ignored (Para 3 & 5).
Issue 4: Quantum of costs to be imposed for wrongful detention and harassment.
Views: The SC found the High Court’s cost of ₹10,000 inadequate given the harassment and abuse of authority. It enhanced costs by an additional ₹59,000 (total ₹69,000), payable within 4 weeks, and allowed the State to recover the amount from the responsible officer(s) (Paras 1, 7 & 9 to11).
Judgment
IN THE SUPREME COURT OF INDIA
[THROUGH VIDEO CONFERENCING]
BEFORE THE BENCH OF
Mr. Dinesh Maheshwari and
Mr. Hrishikesh Roy, JJ.
ASSISTANT COMMISSIONER (ST)
Versus
SATYAM SHIVAM PAPERS PVT. LTD.
Petition for Special Leave to Appeal (C) No. 21132 of 2021, dated 12-01-2022
REPRESENTED BY:
Shri P. Venkat Reddy,
Shri Prashant Tyagi,
Shri P. Srinivas Reddy, Advocates and
M/s. Venkat Palwai Law Associates, AOR, for the Petitioner
[Order]. - Having heard Learned Counsel for the petitioners and having perused the material placed on record, we find no reason to consider interference in the well-considered and well-reasoned order dated 2nd June, 2021, as passed by the High Court for the State of Telangana at Hyderabad in Writ Petition No. 9688 of 2020 [2021 (50) G.S.T.L. 459 (Telangana)]. Rather, we are clearly of the view that the error, if any, on the part of the High Court, had been of imposing only nominal costs of Rs. 10,000/- (Rupees Ten Thousand) on the respondent No. 2 of the writ petition, who is petitioner No. 2 before us.
2. The consideration of the High Court in the order impugned and the material placed on record leaves nothing to doubt that the attempted inference on the part of petitioner No. 2, that the writ petitioner was evading tax because the e-way bill had expired a day earlier, had not only been baseless but even the intent behind the proceedings against the writ petitioner was also questionable, particularly when it was found that the goods in question, after being detained were, strangely, kept in the house of a relative of the petitioner No. 2 for 16 days and not at any other designated place for their safe custody.
3. The High Court has, inter alia, found that:
“41. …..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 (4) hours before the expiry or four (4) 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 4-1-2020 was a Saturday, 5-1-2020 was a Sunday, and the next working day was only 6-1-2020.”
4. The High Court has further found and, in our view, rightly so thus:
“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.
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 6-1-2020. 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”.
5. The High Court has also commented on blatant abuse of the power by the petitioner No. 2 and has deprecated his conduct in the following words:
“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.”
6. Having said so, the High Court has set aside the levy of tax and penalty of Rs. 69,000/- (Rupees Sixty-nine Thousand) while imposing costs of Rs. 10,000/- (Rupees Ten Thousand), payable by the petitioner No. 2 to the writ petitioner within four weeks.
7. The analysis and reasoning of the High Court commends to us, when it is noticed that the High Court has meticulously examined and correctly found that no fault or intent to evade tax could have been inferred against the writ petitioner. However, as commented at the outset, the amount of costs as awarded by the High Court in this matter is rather on the lower side. Considering the overall conduct of the petitioner No. 2 and the corresponding harassment faced by the writ petitioner we find it rather necessary to enhance the amount of costs.
8. Upon our having made these observations, Learned Counsel for the petitioners has attempted to submit that the questions of law in this case, as regards the operation and effect of Section 129 of Telangana Goods and Services Tax Act, 2017 and violation by the writ petitioner, may be kept open. The submissions sought to be made do not give rise to even a question of fact what to say of a question of law. As noticed hereinabove, on the facts of this case, it has precisely been found that there was no intent on the part of the writ petitioner to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioner. When the undeniable facts, including the traffic blockage due to agitation, are taken into consideration, the State alone remains responsible for not providing smooth passage of traffic.
9. Having said so; having found no question of law being involved; and having found this petition itself being rather mis-conceived, we are constrained to enhance the amount of costs imposed in this matter by the High Court.
10. The High Court has awarded costs to the writ petitioner in the sum of Rs. 10,000/- (Rupees Ten Thousand) in relation to tax and penalty of Rs. 69,000/- (Rupees Sixty-nine Thousand) that was sought to be imposed by the petitioner No. 2. In the given circumstances, a further sum of Rs. 59,000/- (Rupees Fifty-nine Thousand) is imposed on the petitioners toward costs, which shall be payable to the writ petitioner within four weeks from today. This would be over and above the sum of Rs. 10,000/- (Rupees Ten Thousand) already awarded by the High Court.
11. Having regard to the circumstances, we also make it clear that the State would be entitled to recover the amount of costs, after making payment to the writ petitioner, directly from the person/s responsible for this entirely unnecessary litigation.
12. This petition stands dismissed, subject to the requirements foregoing.
13. Compliance to be reported by the petitioners.