SC fines GST officer for 'unnecessary litigation' with assessee

In a significant judgment, the Supreme Court of India has enhanced the fine imposed by the High Court against Telangana state's GST officer for "unnecessary litigation".

This comes two years after a load carrier's e-way bill had expired as it got stuck in Hyderabad's Basher Bagh area due to anti-CAA protests in January 2020. Following this, a penalty was imposed both under CGST and SGST by officials on charges of "tax evasion", compelling the auto trolley driver to pay ₹69,000.

The penalty, however, was set aside by the high court in June last year after it found that there was no intent to evade taxes. "This is plainly arbitrary and illegal and violates Article 14 of the Constitution of India, because there is no denial by the 2nd respondent (tax officer) of the traffic blockage at Basher Bagh due to the anti CAA and NRC agitation on 4.01.2020 up to 8.30 pm preventing the movement of auto trolley for otherwise the goods would have been delivered on that day itself. He also does not dispute that 04.01.2020 was a Saturday, 05.01.2020 was a Sunday, and the next working day was only 06.01.2020," says the high court order.

The high court also deprecated the conduct of the tax officer, calling it a blatant abuse of power. "We are also unable to understand why the goods were kept for safe keeping at Marredpally, Secunderabad in the house of a relative of 2nd respondent for 16 days and not in any other place designated for such safe keeping by the state." It further imposed a fine of ₹10,000 on the tax officer payable to the writ petitioner.

The state's GST officer then moved the apex court alleging tax evasion by the writ petitioner under Section 129 of Telangana Goods and Services Tax Act, 2017.

The Supreme Court earlier this month upheld the high court's order and further enhanced the fine on the tax officer by ₹59,000. Calling the plea as "misconceived", the apex court said the state would be entitled to recover the amount of costs, after making payment to the writ petitioner, directly from the person(s) responsible for this entirely unnecessary litigation.

"The amount of costs as awarded by the High Court in this matter is rather on the lower side. Considering the overall conduct of the petitioner No.2 and the corresponding harassment faced by the writ petitioner we find it rather necessary to enhance the amount of costs," says the apex court.

The Supreme Court ruled that the state is responsible for not providing smooth passage of traffic. "It has precisely been found that there was no intent on the part of the writ petitioner to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioner. When the undeniable facts, including the traffic blockage due to agitation, are taken into consideration, the state alone remains responsible for not providing smooth passage of traffic."