Detention of Goods and Imposing Penalty Due to Expired E-Way Bill to Be Quashed if No Mens Rea to Evade Tax is Established: HC

Case Details: Aa Plastics (P.) Ltd. v. Additional Commissioner Grade 2* - [2024] 165 taxmann.com 564 (Allahabad)

Judiciary and Counsel Details

• Piyush Agrawal, J.
• Suyash Agarwal for the Petitioner.

Facts of the Case

The petitioner was engaged in business of manufacturing and supply of LD Polythene Sheets and LD Polythene bags. It had dispatched goods from its unit and the same were detained on ground that E-way bill had expired. It submitted reply stating that truck driver had diverted from route due to personal reasons without informing.

However, the department passed order seizing goods and imposing penalty. It filed appeal but the same was rejected. Thereafter, it filed writ petition against the order.

High Court Held

The Honorable High Court noted that the proceedings under Section 129 read in conjunction with Section 130 require an intent to evade payment of tax. In the instant case, the department failed to establish any mens rea or intent to evade tax by assessee.

Further, the Court noted that before passing of seizure order, an amended E-way bill was produced. However, the department failed to record any finding of mens rea with regard to intention to evade payment of tax. Therefore, it was held that the impugned order seizing goods and imposing penalty was liable to be set aside.

List of Cases Reviewed

• Shyam Sel and Power Ltd. [2023] 155 taxmann.com 145 (Allahabad) [Para 9] followed.