Technical or minor defects are not considered tax evasion: Tripura High Court

- Sales Tax-Soham Mushruwala

Under the GST Act, there is a lot of responsibility on the supplier regarding the movement of goods and orders under Section 16 or 120 are passed by the officials at the checkposts where minor defects are found in the documents. Because of this the supplier has to be very careful. The Tripura High Court has recently given a very interesting judgment on the e-way bill and it was noted that the supplier cannot be considered to have tax evasion intentions when the GST liability is fully paid. . Respect in today's article. N.E. of Tripura High Court Equipment Solutions Pvt. Ltd. Vs. The judgment of the State of Tripura WP (C) 577/2021) has been discussed.

The fact of the case

Hitachi Construction sells machinery through the applicant. Its head office is at Silchar and its branch office is at Agartala. The applicant has supplied a hydraulic machine with a taxable amount of Rs. 2,8,105 / - on which I paid Rs. ૮૯૩૮૯૮ was collected and shown in the cell invoice when the consignment entered the state of Tripura, was detained by the Department of Transport and fined Rs. A fine of Rs 10,000 was levied due to which the e-way bill expired. Disappointed with the Department of Accounts (Section 12 (2) of the GST Act) levying show cause as tax and penalty of Rs.

Merchant's argument

The trader argued that he had supplied the goods by showing GST separately under the tax invoice which would also be reflected in the form on which the tax has been levied. The e-way bill had expired due to unforeseen circumstances. This dilemma arose due to detention by the Transport Department and a new e-way bill was also issued. Which department officials do not accept. This detention will cause huge inconvenience and if the machinery is not delivered on time, the buyer's project will be delayed. Thus, when the full tax has been paid, he immediately requested to leave the machinery.

Account argument

The department has submitted its own show cause notice.

Judgment of the High Court

The High Court noted that there was no dispute over the collection of tax by the department and the tax levied in the bill. There is no doubt that when the consignment of the applicant was first detained at the check post in the state, he had the proper documents with him. In addition, the high court noted that the state was to receive a hefty tax on the applicant's expensive machinery. The GST Act empowers to release machinery on provisional bases. Such authority must be exercised in the right case.

The High Court held that the tax authorities should make a clear distinction between intentional tax evasion and technical or minor similar defects and leave the machinery on a provisional basis when the intention of tax evasion is not proved by taking any technical defect or minor defect. In the present case the applicant has fully discharged the responsibility of IGST and no tax evasion is proved to be intentional. The High Court thus ordered the abandonment of the machinery and allowed the account to make a final assessment in which the applicant would have to deposit any amount in the treasury of the account. Thus, false demands should not be made by the department officials in a small similar mistake.