Medha Servo Drives Pvt Ltd And Anr VS The Assistant Commissioner Of State Tax Bureau Of Investigation

The court has carefully reviewed the affidavit submitted in support of the application for condonation of delay. Upon thorough examination, the court finds that the reasons provided for the delay in filing the appeal are sufficient and justified. Consequently, the court has decided to condone the delay, meaning that it acknowledges the reasons as valid and permits the appeal to proceed despite being filed late. Therefore, the application for condonation of delay is granted, allowing the appeal to move forward without any procedural hindrances due to the late filing.

Upon reviewing the affidavit supporting the application for condonation of delay, we are satisfied that sufficient reasons have been provided for the delay in filing the appeal. Consequently, the delay is condoned, and the application for condonation of delay is allowed.

This intra-Court appeal, filed by the writ petitioners, challenges the orders dated April 20, 2022, and June 22, 2022, issued in WPA No. 6537 of 2022. In these orders, the learned Single Bench extended the time for the respondent to file an affidavit-in-opposition and simultaneously declined to grant any interim order to the appellant. Dissatisfied with this outcome, the appellants have approached us with this appeal.

Upon examination, we find that the writ petition itself can be resolved. Our conviction stems from the order issued by the Senior Joint Commissioner of State Tax (Appeals), Commercial Estate, City Centre, Durgapur, on April 6, 2022. This 23-page order initially appears to be comprehensive, addressing all issues raised by the appellants/writ petitioners. However, a closer reading reveals that substantive discussion is limited to page 23, while pages 1 to 22 merely summarize the appellants’ submissions and the various decisions they cited.

The court reviewed the affidavit supporting the application for condonation of delay and found that sufficient reasons were provided for the delay in filing the appeal. Consequently, the delay was condoned, and the application for condonation was granted. The appeal, filed by the writ petitioners, challenges the orders dated April 20, 2022, and June 22, 2022, from WPA No. 6537 of 2022, wherein the Single Bench extended the time for the respondent to file an affidavit-in-opposition and declined to grant any interim relief to the appellant. The appellants are aggrieved by these decisions and have approached the court through this appeal.

Upon review, the court concluded that the writ petition itself could be resolved without much difficulty. The decision was influenced by the order of the appellate authority, the Senior Joint Commissioner of State Tax (Appeals), Commercial Estate, City Centre, Durgapur, dated April 6, 2022. This order spans 23 pages, initially appearing to be a comprehensive order addressing all the issues raised by the appellants. However, a closer examination revealed that only page 23 contained substantive discussion, while pages 1 to 22 primarily comprised the appellants’ submissions and various cited decisions, some of which were included by the appellate authority.

The core issue in this appeal is whether the appellants were rightly subjected to full tax and penalty based on an alleged violation of Section 129(1)(a) of the Central Goods and Services Tax Act, 2017, in conjunction with the West Bengal Goods and Services Tax Act, 2017. The appellants contended that a single invoice was issued to M/s. Chittaranjan Locomotive Works, a public sector undertaking in West Bengal, and due to the large size of the goods, multiple e-weigh bills were generated for transportation in three trucks. One truck reached the destination without issue, but the other two trucks were intercepted by authorities on August 25, 2021, after the e-weigh bills had expired on August 23, 2021.

The appellants argued that there was no malicious intent (mens rea) to evade tax, asserting that the delay was not deliberate. Despite this, the Adjudicating Authority imposed full tax and penalty. Dissatisfied with this decision, the appellants appealed to the First Appellate Authority. The primary issue for the Appellate Authority was to determine if there was any mens rea in the appellants’ actions. Unfortunately, despite the lengthy 22-page order from the Appellate Authority, it lacked substantive analysis regarding the appellants’ intent to evade tax.

In a recent judgment, it was discussed whether the mens rea (the intention or knowledge of wrongdoing) was established in a tax evasion case. It is well-settled law that simply using the term “mens rea” does not automatically imply a willful attempt by a dealer to evade tax payments. The concerned authority or the First Appellate Authority must explicitly record the reasons in writing, detailing how and in what manner mens rea was established.

In the present case, the Appellate Authority’s order dated April 6, 2022, lacked such detailed reasoning. Therefore, the court has determined that the matter should be remanded back to the Appellate Authority for fresh consideration. The specific issue to be reconsidered is whether there was any mens rea on the part of the appellants to evade the payment of duty.

As a result, the appeal and the connected application have been allowed. Consequently, the writ petition is also allowed, and the orders passed by the learned Single Judge dated April 20, 2022, and June 22, 2022, are set aside. The matter is remanded to the Appellate Authority for fresh consideration. The Appellate Authority is directed to examine the aspect of mens rea and provide an opportunity for a personal hearing to the authorized representative of the appellants. A fresh order on the merits and in accordance with the law must be passed.

The court emphasized that it has not addressed the matter on its merits. The Appellate Authority is to make its decision independently, without being influenced by any observations made in this order.

In addressing the question of whether mens rea was established, it is a well-settled principle that merely using the term “mens rea” does not suffice to conclude that there was a willful attempt by the dealer to evade tax payment. The relevant authority, including the First Appellate Authority, must provide written reasons detailing how and in what manner mens rea was established. As this was missing in the order passed by the Appellate Authority on April 6, 2022, it has been decided that the case should be remanded back to the Appellate Authority for a fresh review to specifically address whether there was any mens rea on the part of the appellants to evade duty payment.

Consequently, the appeal and the connected application are allowed. The writ petition is also allowed, and the orders passed by the learned Single Judge on April 20, 2022, and June 22, 2022, are set aside. The case is remanded to the Appellate Authority for fresh consideration, directing the Appellate Authority to assess the aspect of mens rea, provide an opportunity for a personal hearing to the appellants’ authorized representative, and issue a new order based on merits and in accordance with the law.

It is emphasized that the merits of the case have not been discussed, and the Appellate Authority should make a decision independently, uninfluenced by any observations made in this order. The appellants have previously furnished a bank guarantee for the total amount of tax and penalty. With the order set aside and the matter remanded, the appellants are no longer required to maintain the bank guarantee. Instead, they are directed to provide a bond to the satisfaction of the concerned authority for the total amount of tax and penalty.

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