Court Uncovers Misleading Petition in GST E-way Bill Case, Exempts Officials' Appearance

Case Name:

M/s. Ashoka Enterprises Vs. State of U.P.

Writ Tax No. 765 of 2018

Key Takeaways:

- The court discovered contradictions in the company's petition, raising doubts about its credibility.

- The company has a history of tax evasion, with penalties imposed at least 25 times since 1999.

- The court initially ordered tax officials to appear but later exempted them after uncovering potential misrepresentation.

- This case highlights the importance of truthful representation in court proceedings.

Issue:

The main question here is: Did the tax authorities wrongfully seize the company's goods despite the presence of a valid E-way bill, or was the company misrepresenting facts to the court?

Facts:

- M/s Ashoka Enterprises claimed their goods were seized during transit.

- They said they showed the E-way bill, but the authorities still forced them to submit an undated reply to a notice.

- The company alleged this notice claimed the goods weren't accompanied by an E-way bill.

- Initially, the court ordered two tax officials to appear:

Smt. Kamni Chauhan Ratan (Commissioner of State Tax) and Sri Raj Kumar Kureel (Assistant Commissioner, State Tax, Mobile Squad).

- The case is being heard under the U.P. Goods & Service Tax Act, 2017.

Arguments:

The company's side:

- They claimed they had a valid E-way bill but were still forced to submit a reply under duress.

- They argued that the authorities were acting unfairly.

The tax authorities' side:

- They pointed out contradictions in the company's petition.

- They showed evidence of the company's history of tax evasion.

- They argued that no show cause notice was issued as alleged by the company.

Key Legal Precedents:

In this case, the court didn't cite any specific legal precedents. Instead, they focused on the facts presented and the credibility of the petitioner. The key legal point here is Section 129(3) of the U.P. Goods & Service Tax Act, 2017, which was mentioned in relation to the alleged show cause notice.

Judgement:

- They found contradictions in the company's petition about who actually owns the business.

- The court discovered that the company had a history of tax evasion, with penalties imposed at least 25 times since 1999.

- They realized they might have been misled by the company during the initial hearing.

- The judges exempted the tax officials from appearing in court for future hearings.

- They ordered the tax authorities to file a counter-affidavit within ten days, detailing all the facts.

- The company was given a week after that to file a rejoinder affidavit.

- The court warned that if the allegations of misrepresentation are proven, they might impose heavy costs on the company and even initiate contempt proceedings.

FAQs:

Q1: What's an E-way bill?

A1: An E-way bill is an electronic document required for the movement of goods in India under the GST system.

Q2: Why did the court initially order the tax officials to appear?

A2: The court initially believed the company's allegations of misconduct by the officials.

Q3: What changed the court's mind?

A3: The Additional Advocate General pointed out contradictions in the company's petition and revealed their history of tax evasion.

Q4: What happens next in this case?

A4: The tax authorities will file a counter-affidavit, followed by the company's rejoinder. The court will then review these documents to decide further action.

Q5: What are the potential consequences for the company if they're found to have misled the court?

A5: They could face heavy fines (called exemplary costs) and possibly contempt of court proceedings.

In compliance of our order dated 09.05.2018 Smt. Kamni Chauhan Ratan (respondent no. 2) Commissioner of State Tax, U.P. Goods & Service Tax, Lucknow and Sri Raj Kumar Kureel (respondent no. 3) Assistant Commissioner, State Tax, Mobile Squad, Unit-III, Noida are present in person.

Sri Manish Goel, learned Additional Advocate General points out that the petitioner has been described as M/s Ashoka Enterprises through its proprietor Sri Fazil. The affidavit is also sworn by Sri Fazil describing himself to be sole proprietor of the firm. Vakalatnama has also been executed by Sri Fazil describing himself to be proprietor of the firm whereas the representation/application dated 02.05.2018 made before respondent no. 3 has been signed by Sri Ashok Kumar Agarwal.

Similarly undated application filed as Annexure-8 to the writ petition in pursuance of the show cause notice under Section 129 (3) of the U.P. Goods & Service Tax Act, 2017 (in short 'UPGST Act, 2017') goes to show that it has been signed by Sri Ashok Kumar Agarwal, proprietor of firm M/s Ashoka Enterprises, resident of E-19, Sector-7, Noida-I.

Thus, there is contradiction in the pleadings in respect of the description of the petitioner and it is not clear that Sri Fazil is the actual proprietor of the firm or Sri Ashok Kumar Agarwal. Sri Manish Goel, learned Additional Advocate General further pointed out paragraphs 11 and 12 of the writ petition where in averments have been made in respect of the generation of the E-way bill and producing the same before respondent no. 2 on the

same date and submission of reply to the show cause notice under Section 129 (3) of the Act, which according to the pleadings made in the paragraphs, has not been issued at that point of time and the reply was obtained under threat and coercion are sworn on the basis of the record which totally falsifies the averments in the said paragraphs.

On 09.05.2018, we required the presence of respondent 3 to explain his conduct on the allegations made against him in the pleadings and the respondent no. 2 to suggest the ways and means to remedy the situation but it appears that we were misled by the petitioner and at the time of first hearing neither the fact had been pointed out by learned Standing Counsel

appearing for the State-respondents nor we noticed the same and without noticing the fact we required the respondents no. 2 & 3 to be present in person.

Sri Manish Goel, learned Additional Advocate General has also placed before us the previous record of the assessee for the period 1999 till 26.03.2018 showing that penalty has been levied for evasion of the tax against the petitioner firm at least 25 times which goes to show that he is a habitual evader of tax. Let a counter affidavit be filed on behalf of the respondents

bringing all these facts on record within ten days. Rejoinder affidavit may be filed within a week thereafter.

Put up in Additional Cause List on 29.05.2018.

Personal appearance of both the officials on future date is exempted. In case, allegations and anomalies pointed out by Sri Manish Goeal, learned Additional Advocate General are found to be established after exchange of affidavits, the question of imposing heavy exemplary costs and proceedings for initiation of contempt upon the petitioner shall be considered on the next date of hearing.

Order Date :- 14.5.2018