2021 Supreme(All) 177

IN THE HIGH COURT OF ALLAHABAD
Saumitra Dayal Singh,J.
M/S Anandeshwar Traders - Petitioner
Versus
State Of U.P. And 2 Others - Respondent
WRIT TAX No. - 503 of 2020
Decided On : 18-01-2021

Point of law: presumption could not be drawn on the basis of the existence of the e-way bills though there did not exist evidence of actual transaction performed and though there is no statutory presumption available. Also, there is no finding of the assessing authority to that effect only. Mere assertion made at the end of the seizure order that it was clearly established that the assessee had made double use of the e-way bills is merely a conclusion drawn bereft of material on record. It is the reason based on facts and evidence found by the assessing authority that has to be examined to test the correctness of the order and not the conclusions, recorded without any material on record.

Headnote:

Central Goods and Service Tax Act, 2017 – Section 129(1) – Central Goods and Service Tax Rules, 2017 – Rules 138, 112 – Demand of tax – Penalty – E-way bills – Present petition is directed against the order passed by the Additional Commissioner Grade-2 (Appeal)-5, Commercial Tax, Kanpur, whereby the demand of tax and penalty amounting to Rs. 29,76,110/-has been confirmed – Petitioner is a trader in Pan Masala and other goods. – It claims to have sold disputed goods to a dealer -Shri Durga Trading Company, Darjeeling, West Bengal, against its Tax Invoice – Two e-way bills were also prepared being e-way bill – Both e-way bills were prepared. – Bilty of M/s Ganpati Road Carriers Pvt. Ltd. being LR/321 and LR/322 were also prepared for transportation of those goods.

Finding of the court: As to the power of the appeal authority to entertain additional evidence, again, there can be no doubt that Rule 112 of the Rules does not allow for additional evidence to be led at the instance of the respondent in the appeal. – In the case of penalty or assessment, where the appeal may be filed by the assessee alone, the correctness of the order is to be tested on the strength of the reasons given in that order and not on the basis of any supplementary or other material that may be brought on record by the revenue authority during the appeal proceedings. – To do that would be to allow the order impugned in an appeal proceeding to be tested and affirmed on fresh reasons, existing outside the assessment or penalty order. Clearly, that is impermissible and against the principle laid down by the Supreme Court in Mohinder Singh Gill (supra). – In absence of specific Rule of procedure allowing the appeal authority to admit additional evidence at the behest of the respondent, it never became open to it to confront the petitioner with that evidence and draw it's independent conclusions based thereon. – Though the petitioner-assessee has also disputed the correctness of the additional evidence, that issue is not required to be gone into in the present case. – Accordingly, it is found that the order passed by the appeal authority is erroneous, being contrary to the provisions of law. – The appeal authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order. – The proper authority, had not recorded any reason to establish evasion of tax or attempt to evade tax or even reuse of the documents by the petitioner. – Though he raised that issue in the seizure proceedings, he did not record any finding that effect in the final order passed under Section 129(3) of the Act. – He simply rejected the explanation furnished by the assessee without recording any reason and consequently imposed tax and penalty. – No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case that too after being aware of the defense set out by the assessee in the first leg of the proceedings. – Order passed by the proper authority under Section 129(3) of the Act is found to be perverse and is set aside. Any amount that may have been deposited by the petitioner-assessee, may be returned to it, in accordance with law.

Result: – Petition Allowed