Allahabad High Court Quashes Proceedings Against Transporter in GST Evasion Case

Court rules lack of evidence against transporter in tax evasion; orders refund of deposited amount.

In a significant ruling, the Allahabad High Court has quashed the proceedings initiated against M/S Anish Transport Company, a transporter implicated in an alleged tax evasion case under the Goods and Services Tax Act, 2017. The court found no adverse material or intent to evade tax by the transporter, thereby nullifying the actions taken by the authorities.

The writ petition, filed by the transport company against the order dated October 26, 2021, was heard by Justice Piyush Agrawal. The company, represented by counsels A.K. Mishra and Niraj Kumar Singh, challenged the proceedings initiated after their vehicle, carrying goods from Dehradun to Delhi, was intercepted at Meerut on September 25, 2020. The interception revealed a shortfall in the quantity of goods compared to the e-way bill, leading to the seizure of the goods and the vehicle.

Despite the discrepancy, the authorities released the goods to the consignor, identifying them as the rightful owners. However, they proceeded against the transporter under Section 129(3) of the GST Act. The transport company contended that no adverse findings were recorded against it concerning any intent to evade tax or involvement in the purchase or sale of goods. The petitioner argued that the shortfall was due to a human error during loading and was not intended to evade taxes.

The court, upon reviewing the case, noted that the authorities failed to establish any adverse material against the transporter. Justice Agrawal emphasized that the goods were accompanied by necessary documents, and no evidence suggested the transporter’s involvement in tax evasion activities. Consequently, the court held that the seizure of the vehicle and proceedings against the transporter were unsustainable.

In its judgment, the court ordered the quashing of the impugned order and directed that any amount deposited by the transporter pursuant to the proceedings be refunded in accordance with the law. This decision underscores the importance of substantiating claims of tax evasion with concrete evidence, especially when implicating third parties like transporters.

Bottom Line:

GST - Transporter cannot be held liable for tax evasion if there is no adverse finding or material on record against the transporter proving involvement in purchase or sale of goods or intent to evade tax.

Statutory provision(s): Goods and Services Tax Act, 2017 Section 129(3)

M/S Anish Transport Company v. State of U.P., (Allahabad) : Law Finder Doc Id # 2818240