In a case that highlights how transporters could be harassed through the e-way bill system, the High Court (HC) of Tripura directed the tax authorities to release a transport vehicle and machinery detained due to the e-way bill's expiry and other issues. The truck was detained by the state authorities for 24 hours citing no registration for the excavator, during which the e-way bill expired, creating further problems.
In an order passed on 24 August 2021, a bench consisting of chief justice Akil Kureshi and justice Arindam Lodh, says, "The tax authorities must make a clear distinction between deliberate tax evasion and technical or minor defects which manifest no intention to evade tax. When the integrated goods and services tax (IGST) liability has been fully discharged, no intention can be attributed on the part of the petitioner to evade tax."
"In the present case, therefore, we would release the machinery upon the petitioner filing an undertaking before this Court that eventually subject to appeal and further right to challenge the order of assessment, if any tax or penalty liability is crystallized, the petitioner will discharge the same," the HC says.
Silchar-based NE Equipment Solutions Pvt Ltd had sold one excavator to Satya Sundar Das of Khowai. The cost of machinery was Rs49.66 lakh, on which IGST of Rs8.94 lakh was collected from the purchaser and duly declared in the sale invoices. The excavator was transported from Silchar to Agartala under a correctly generated e-way bill on 14 August 2021 with a validity period of 16 August 2021.
The excavator was transported in a truck trailer and started its journey from Silchar on 15 August 2021. When it reached the Churaibari check post in the early morning hours on 16 August 2021, the transport department of Tripura detained the vehicle on the ground that the excavator had no registration in the state, which was violation of Section 192A of the Motor Vehicles Act.
Eventually, the transport authority released the order of detention on 17 August 2021 after NE Equipment Solutions paid a fine of Rs10,000.
In the meantime, however, the validity of the e-way bill had expired. The GST authorities then intercepted the vehicle at the Churaibari check post, saying that the driver did not have a valid e-way bill for the machinery being brought within the state.
NE Equipment Solutions then generated a new e-way bill on 18 August 2021. However, the authorities refused to accept the same as a valid document for passage. The next day, the superintendent of taxes at the Churaibari enforcement wing issued a show-cause notice to the company under section 129(3) of the Central Goods and Services Tax (CGST) Act and the State Goods and Services Tax (SGST) Act, calling upon the company as to why unpaid tax with penalty totalling to Rs17.88 lakh should not be recovered.
NE Equipment Solutions then approached the High Court primarily for the release of the machinery. (WP(C) No.577/2021)
The HC observed that the tax department did not dispute that the company has collected the necessary GST on machinery sale as indicated in the sale invoice. There also was no allegation of such tax not being deposited with the government revenue.
It says, "The tax department is not in a position to dispute that the vehicle did arrive at Churaibari check post carrying proper e-way bill and within the validity period of the e-way bill. The validity expired on account of an unforeseen and unexpected delay in crossing the check post since the transport department stopped the vehicle's movement on the ground that the machinery was not registered in the state of Tripura. This issue was cleared when the transport department imposed a fine of Rs10,000, which NE Equipment Solutions paid."
This process, however, took more than 24 hours, and in the meantime, the validity of the e-way bill expired. Though NE Equipment Solutions generated a new e-way bill, the GST department of the state was not prepared to accept it, the bench noted.
Under the circumstances, the HC says, allowing the department to detain the machinery would be wholly impermissible. "The fault of NE Equipment Solutions, if at all, is rather technical. The machinery costs nearly half a crore of rupees on which the government has already earned substantial tax. Detaining such machinery at the check post would expose it to deterioration, particularly in the present season of heavy rainfall. The purchaser of the vehicle would also suffer gross inconvenience because having paid more than Rs50 lakh to purchase the machinery; he would not get the delivery of it for an indefinite period. His projects and works which must be in the pipeline would also suffer."
"Under the GST regime, even the tax authority has the power to release machinery on a provisional basis pending further assessment. In certain appropriate cases, such powers must be exercised. Present was an ideal case where such powers should have been activated," the bench of chief justice Kureshi and justice Lodh stated.
An E-way bill is an electronic waybill for the movement of goods generated on the e-way bill portal. An E-way bill is generated when there is a movement of goods in a vehicle and conveyance of value of more than Rs50,000, as one invoice or in aggregate of all invoices in a vehicle or transportation. An entity registered under goods and services tax (GST) cannot transport goods in a vehicle whose value exceeds Rs50,000 either in a single invoice, bill, or delivery challan without an e-way bill generated on ewaybillgst.gov.in.