Usha Martin Limited vs The Deputy Commissioner of State Tax, Durgapur Range

Intentions matter more than actions: That’s the verdict of the Calcutta High Court in the case of detention of vehicle and levying a penalty. This case is not a landmark judgment, but it is not less than that either. Facts and Timelines: Goods while being loaded into the vessel got damaged and had to be taken back to appellants factory for repair For such purpose, the appellant generated the e-Way Bill based on a challan but the e-way bill got expired and goods were detained while in transit Assessee aggrieved by the impugned order confirming levying 100% tax and penalty The court then reviewed the circumstances leading to the original levy of tax and penalty.

The goods in question, owned by Usha Martin Ltd, were intended for export. They were damaged and taken back to the factory for repairs, with an e-Way Bill generated indicating no tax payable. However, the goods were intercepted and detained on 13-Sep-2019, just after the extension period of the e-Way Bill had expired. Department levied 100% Tax Penalty. Assessee filed appeal. The appellate authority passed an order confirming 100% tax and penalty. Almost two years later, Petitioner challenged this order by filing a writ petition in court (WPA 10856 of 2022).

The delay in appealing was due to the expected constitution of a Tribunal to which they initially intended to bring their grievance. However, as the Tribunal was not constituted even after two years, they proceeded to file the writ petition. 22-Jun-2022: The writ petition was dismissed by the learned Single Bench. Concurrently, Usha Martin Ltd also sought a condonation for a delay of 320 days in filing the intra-court appeal (CAN 1 of 2023). The court found the explanation for the delay to be bona fide and allowed the condonation. The court considered prior cases with similar circumstances, concluding that Usha Martin’s actions did not represent an intention to evade tax. Considering the peculiar facts and circumstances of the case, the court found it unfit to levy the tax and penalty. As a result, both the intra-court appeal and the writ petition were allowed, and the orders impugned in the writ petition were set aside and quashed

1. can 1 of 2023 has been filed by the appellants seeking condonation of delay of 320 days in filing this appeal.

2. learned counsel for the appellant has referred to the explanation which has been furnished in the application and also has made submission in respect of the explanation for the delay.

3. we find that the delay in filing this appeal has been sufficiently explained and the appellant was prevented from filing the appeal within time on account of bona fide reason.

4. hence, can 1 of 2023 is, accordingly, allowed. the delay in filing the appeal is condoned.

5. this intra court appeal by the appellants is directed against the order passed by the learned single bench dated 22nd june, 2022 in wpa 10856 of 2022.

6. by the said order the learned writ court had dismissed the writ petition filed by the appellants challenging the order passed by the appellate authority dated 20th july, 2022 confirming the order of levying 100% tax and penalty.

7. on the ground that the appellants had approached the writ court almost after two years after the appellate authority had passed the order. the explanation given by the appellants is that the appellants, being aggrieved by the order passed by the appellate authority was entitled to go before the tribunal.

8. however, since a tribunal was not constituted, the appellants were advised to await the constitution of the tribunal and thereafter since the tribunal was not constituted for almost two years, the appellants were advised to file the writ petition. in any event the appellants had already paid the tax and penalty and therefore, we are of the view that the matter can be decided on merits.

9. the undisputed facts are that the goods in question were meant for export and the appellants had generated an e-way bill which was valid till 12th september, 2019.

10. the appellants’ case is that the goods while being loaded into the vessel and had got damaged and as a result, the goods had to be taken back to the appellants factory at ranchi for repairs. for such purpose the e-way bill was generated based on a challan on 7th september, 2019 which was valid till 12th september, 2019.

11. on perusal of the e-way bill, it is seen that no tax was payable since the goods which were owned by the appellants were taken back to their factory at ranchi for repairs. the goods were detained while in transit at about 8.20 a.m. on 13.09.2019. in terms of rule 138(10) of the wbgst rules an option is given to the assessee to extend the period of e-way bill and such extension should be done before eight hours and after eight hours of the expiry of its validity. admittedly the eight hour period expired about 8.10 a.m. on 13.09.2019 and at about 8.20 a.m. the goods were intercepted and detained.

12. the identical issue was considered by the court in various matters and some of which being in the case of progressive metals pvt. ltd. v. the deputy commissioner, state tax, bureau of investigation, south bengal, durgapur zone & ors. in mat 562 of 2023 dated 28.04.2023 and in kdg projects pvt. ltd. v. assistant commissioner of state tax, bureau of investigation (north bengal) reported in 2022(66) g.s.t.l. 262 (cal) and the decision in medha servo drives private limited & anr. v. the assistant commissioner of, state tax, bureau of investigation (south bengal), durgapur zone & ors. in mat 1751 of 2022 dated 17.11.2022. in all these matters the court considered the conduct of the assessee and having found that the conduct was not with the intention to evade tax, granted relief to those assessees. the case on hand also would fall under the said category since there is no allegation of any evasion of tax rather it is not disputed that the goods were being transported under a cover of challan to the factory of the appellants for carrying out repairs.

13. considering the peculiar facts and circumstance of the case, this court is of the view that it is not a fit case where tax and penalty should have been levied on the appellants.

14. for the above reasons, the appeal as well as the writ petition is allowed and the orders impugned in the writ petition are set aside and quashed.

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Usha Martin Limited

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