Finding of intent to avoid tax payment must be reversed before allowing appeal – HC

Once a finding of intent to avoid payment of tax recorded, the appellate authority before allowing appeal bound to reverse said finding of fact.

In a recent judgment, Hon’ble Allahabad High Court has held that once the GST authorities have recorded a finding of fact that there was an intent to avoid the payment of tax, the appellate authority, before allowing appeal was duty bound to reverse the said finding of fact. 

ABCAUS Case Law Citation:
ABCAUS 4153 (2024) (07) HC

In the instant case, the UP GST Department had challenged the order passed by the GST 1st Appellate Authority in quashing the order passed u/s 130 of the UP GST Act (the Act).

The goods in question was intercepted and it was found that vehicle number in Part-B of the e- way bill was not duly filled. Therefore, after interception of the goods, a show cause notice was issued to the dealer. However, no reply to the said show cause notice was given by the respondent dealer, therefore, the authorities passed the order under Section 130 of the Act after recording specific finding that the goods in question were being transported without accompanying with the proper documents with intent to avoid the payment of tax.

The said order was assailed by the dealer in the appeal which was allowed by the 1^st Appellate Authority without reversing the specific finding of fact recorded by the detaining authority, merely observing that there was no intention to avoid the payment of tax.

The Department contended that once the finding of fact was recorded after due notice to the respondent, the impugned order should not have been passed. It was further submitted that the impugned order has been passed on the basis of the judgement passed by the Hon’ble High Court but the authorities have not considered the fact that in the present case specific finding of fact has been recorded by the detaining authority that there was an intention to avoid the payment of tax.

The Hon’ble High Court observed that it was not in dispute that the goods in question was intercepted and same was detained on the ground that the e-way bill was not duly filled as required under the Act and after giving due notice to the respondent, the order was passed specifically mentioning therein that there was an intent to avoid the payment of tax.

The Hon’ble High Court held that once the authorities have recorded a finding of fact that there was an intent to avoid the payment of tax, the appellate authority was duty bound to reverse the said finding of fact but the 1^St Appellate Authority had only given a reference of the judgment of the Bench while allowing the appeal.

The Hon’ble High Court held that the appellate authority had failed to record any cogent reason as to how the said judgement was applicable in the facts of the present case. The appellate authority had neither recorded any specific finding of fact in order to reverse the finding that there was no intent to avoid the payment of tax, nor recorded any reason that the said case law relied upon was applicable in the facts of the present case.

It was held that the impugned order cannot be sustained in the eyes of law and was quashed accordingly.

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