Court sets aside GST order for non-compliance with e-way bill rules, allows appeal on merits.

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Case Name:

M/s. Gaurav Agro Kendra Vs. State Of U.P. (High Court of Allahabad)

Misc. Bench No. 34276 of 2019

Date: 11th December 2019

Key Takeaways:

- The court cannot entertain a writ petition involving questions of fact when the petitioner has a statutory remedy of appeal available but not availed.

- The court set aside the orders imposing GST assessment and penalty on the petitioner for non-compliance with e-way bill procedures.

- The case was remanded to the assessing authority to examine the matter afresh without applying the e-way bill mechanism, as it was held that the e-way bill procedure was not applicable during the relevant period (1.2.2018 to 31.3.2018).

- The appellate authority was directed to decide the appeal on merits expeditiously if filed by the petitioner.

Issue:

Whether the court can entertain a writ petition challenging an order imposing GST assessment and penalty for non-compliance with e-way bill procedures when the petitioner has a statutory remedy of appeal available but not availed.

Facts:

The petitioner, M/S. GAURAV AGRO KENDRA, was issued an order dated 15.02.2018 by the Assistant Commissioner (In charge), Commercial Tax, Mobile Squad, Gonda, imposing GST assessment and penalty for non-compliance with e-way bill procedures. The petitioner challenged this order by filing an appeal before the Additional Commissioner Grade-2 (Appeal), Commercial Tax, Gonda. The main contention raised by the petitioner was that the notification to apply the e-way bill mechanism was not made known to the petitioner. The petitioner argued that the mandate to apply the e-way bill mechanism was earlier circulated by the government in 2017 but was kept in abeyance. The notification to apply the e-way bill mechanism was revised subsequently but was not notified to the petitioner. The petitioner made the transactions as per the existing procedure with the required declaration. However, the assessing authority and the appellate authority did not consider the documents provided by the petitioner, as the petitioner had not complied with the e-way bill system, even though it was not notified to the petitioner.

Arguments:

The petitioner’s main argument was that the notification to apply the e-way bill mechanism was not made known to the petitioner, and therefore, the petitioner should not be penalized for non-compliance with the e-way bill procedures. The petitioner also relied on the judgments of the court in M/s Harley Foods Products Pvt. Ltd. v. State of U.P. and L.G. Electronics India Pvt. Ltd. v. State of U.P., wherein it was held that the e-way bill procedure was not applicable during the period from 1.2.2018 to 31.3.2018.

Key Legal Precedents:

The court cited the following legal precedents:

M/s Harley Foods Products Pvt. Ltd. v. State of U.P.

L.G. Electronics India Pvt. Ltd. v. State of U.P.

In these cases, it was held that the e-way bill procedure was not applicable during the period from 1.2.2018 to 31.3.2018.

Judgement:

The court dismissed the writ petition, holding that the petitioner had the remedy of appeal under Section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017, but without availing it, the writ petition had been filed. The court noted that questions of fact were involved in the writ petition, which could not be addressed while exercising jurisdiction under Article 226 of the Constitution of India.

However, the court granted liberty to the petitioner to avail the remedy of appeal provided under Section 107 of the Act. The petitioner was allowed to make an application for condonation of delay, as the petitioner was bonafidely pursuing the writ petition. If an appeal along with an application for condonation of delay is filed, the Appellate Authority was directed to decide it on merits and expeditiously.

Furthermore, the court set aside the impugned orders and remanded the case to the Assessing Authority to examine the matter afresh in light of the law propounded by the court, without applying the e-way bill mechanism.

FAQs:

Q1. What was the main issue in this case?

A1. The main issue was whether the court could entertain a writ petition challenging an order imposing GST assessment and penalty for non-compliance with e-way bill procedures when the petitioner had a statutory remedy of appeal available but did not avail it.

Q2. Why did the court set aside the orders passed by the tax authorities?

A2. The court set aside the orders because it was held that the e-way bill procedure was not applicable during the relevant period (1.2.2018 to 31.3.2018), as per the judgments cited in the case.

Q3. What liberty was granted to the petitioner by the court?

A3. The court granted liberty to the petitioner to avail the remedy of appeal provided under Section 107 of the Uttar Pradesh Goods and Services Tax Act, 2017, along with an application for condonation of delay.

Q4. What direction was given to the Appellate Authority?

A4. If an appeal along with an application for condonation of delay is filed by the petitioner, the Appellate Authority was directed to decide it on merits and expeditiously.

Q5. What was the court’s direction to the Assessing Authority?

A5. The court remanded the case to the Assessing Authority to examine the matter afresh in light of the law propounded by the court, without applying the e-way bill mechanism.

By this writ petition, a challenge has been made to the order dated 15.02.2018 passed by respondent no. 2- Assistant Commissioner (In charge), Commercial Tax, Mobile Squad, Gonda as well as the order dated 17.06.2019 passed by the respondent no. 3-Additional Commissioner Grade-2 (Appeal), Commercial Tax, Gonda passed in the appeal preferred by the petitioner.

It is stated that the assessing authority passed the order dated 15.02.2018 not only for the assessment of G.S.T. but with the imposition of penalty. Challenge to aforesaid order was made by filing an appeal before the respondent no. 3. The main contention raised therein was that the notification to apply E-Way bill was not made known to the assessee. Mandate to apply mechanism of E-way bill was earlier circulated by the Government in the year 2017 but than it was kept in abeyance. The notification to apply E-way bill mechanism was revised subsequently but was not notified to the assessee. In absence of information of application of E-way bill mechanism, the petitioner made the transaction, as per the procedure then existing with required declaration. The document in that regard were not considered by the Assessing Authority as well as by the Appellate Authority as compliance of E-way bill system was not made by the petitioner though it was not notified by the Government. The order for assessment and penalty was challenged in appeal for the aforesaid reasons.

The impugned orders have been challenged even in reference to the judgment of this Court dated 05.04.2018 also passed in Writ Tax No. 584 of 2018 (M/s Harley Foods Products Pvt. Ltd. vs. State of U.P.) . It is also in the light of subsequent judgment dated 19.11.2018 passed in Writ Tax No. 617 of 2018 ( L.G. Electronics India Pvt. Ltd. Vs. State of U.P.). It was held that E-way bill procedure during 1.2.2018 to 31.03.2018 was not applicable.

In light of the aforesaid, the impugned orders cannot sustain. The appellate authority was expected to consider the issue in the light of the judgment in the case of M/s Harley Foods Products Pvt. Ltd. (supra). Ignorance of the judgment of a superior Court on the similar issue cannot be expected rather the appellate authority needs to be careful in future.

The impugned orders are accordingly set aside with remand of the case to the Assessing Authority to examine the matter afresh in light of the law propounded by this Court. It would be without applying E-way bill mechanism.

With the aforesaid, the writ petition is disposed of.

Order Date :- 11.12.2019

Ashish