Delivery after E-Way Bill expired not Considered GST Evasion

Delays in delivery after the E-Way Bill has lapsed would not be considered GST evasion.

• The Supreme Court has ruled that non-delivery of goods within the validity period of an e-way bill, as well as non-extension of an e-way bill, does not always imply tax evasion, especially where the delay is caused by external reasons.
• We thought we’d bring up a scenario that would help to clarify the argument and serve as a wake-up call for many suppliers.

The Actual Incidence

• This incident occurred during the CAA-NRC protests that swept India at the time. M/s Satyam Shivam Papers Pvt. Ltd., a paper distributor, generated an e-way bill dated Saturday, 4/1/2020 to make an intra-state supply. On the next working day, Monday, 6/1/20, the transporter left the distributor’s location for the supply location but became detained in heavy traffic caused by political rallies opposing CAA & NRC.
• The transporter had no choice but to return home in his truck. The next day, he went to the delivery location, but was stopped by a Deputy State Tax Officer, who issued a detention notice and levied tax and penalty, stating as following:
  • E-way bill had been expired
  • Respondents were trying to evade tax
  • Driver unloaded the goods at his private residence

The Proceedings

• The validity of an e-way bill for more than 20 kilometres can be extended by a day, according to Rule 139 of the CGST Rules, 2018.
• Matter was taken to the Telangana High Court, which ultimately fined the Revenue Department Rs. 10,000.
• Honourable Supreme Court agreed with the Telangana High Court’s verdict, finding the assertions of the Deputy Sales Tax Officer to be unfounded.
• The respondent had no intention of evading tax, and the delay in delivery was properly caused by heavy traffic, a factor beyond an individual’s control, according to the Supreme Court. It was also discovered that after holding the goods, the Offer had kept them at his relative’s house. This raised further suspicion on part of Deputy Sales Tax Officer.
• In the end, the Honourable Supreme Court determined that the relevant Officer pay Rs. 59,000 in addition to the fine of Rs. 10,000 to the respondent for the harassment caused and the superfluous litigation.