Case Details:

NE Equipment Solutions Pvt. Ltd. vs. State of Tripura & Ors.

Appeal No.:

WP (C) No. 577/2021

Order Pronounced by:

Tripura High Court

Date of Order:

24-08-2021

The petitioner is engaged in the business of dealing in TATA Hitachi Construction Machinery. In the course of business, the petitioner sold one TATA Hitachi Hydraulic excavator with a cost of Rs. 49,66,102 on which IGST of Rs. 8,93,898/- was collected from the buyer and duly declared in the sale invoice. The excavator was being transported from Silchar to the head office of the petitioner company at Agartala under a properly generated e-way bill dated 14-08-2021 with a validity period up to 16-08-2021.

On 16-08-2021, the Transport Department of Tripura detained the vehicle on the ground that the excavator had no registration in the State of Tripura under Motor Vehicles Act. Eventually, the validity of the e-way bill expired till the release of the excavator by the Transport Department. The petitioner generated a fresh e-way bill on 18-08-2021 which the GST authorities refused to accept the same as a valid document for passage. The petitioner was called upon to pay tax along with a penalty totaling Rs. 17,87,796/- by a Show Cause Notice issued by State GST authorities. The petitioner, therefore, prayed before the court for the release of the machinery.

The department does not dispute that the petitioner has collected the necessary GST on the sale of machinery as indicated in the sale invoice. There is no allegation of such tax not being deposited with the Government revenue.

The department is not in a position to dispute that the vehicle was carrying a proper e-way bill. The validity expired on account of an unforeseen and unexpected delays in crossing the check post since the Transport Department stopped the movement of the vehicle. The entire process of release of the vehicle took more than 24 hours and, in the meanwhile, the validity of the e-way bill expired. Though the petitioner generated a new e-way bill, the GST department of the State was not prepared to accept it.

The fault of the petitioner if at all is rather technical. Under the GST regime, even the tax authority has the power to release machinery on a provisional basis pending further assessment. In appropriate cases, such powers must be exercised. Present was an ideal case where such powers should have been activated.

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 IGST liability has been fully discharged, no intention can be attributed on 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 would discharge the same.