Last Updated on February 16, 2024 by News Desk
The Allahabad High Court has ruled that governments should collect taxes like honey bees collect honey from a flower without disturbing its petals. M/S Hawkins Cookers Limited, engaged in the business of manufacturing and selling pressure cookers under the brand name Hawkins, sought a writ of certiorari for quashing the penalty order dated February 14, 2020, and the order passed in appeal dated October 13, 2020. The petitioner, M/S Hawkins Cookers Limited, was involved in the production and sale of pressure cookers under the brand name Hawkins.
The petitioner’s principal place of business is situated at B.M Market, Juhi, Kanpur, while its factory is located at SIDA Industrial Estate, Satharia, Jaunpur. The petitioner purchased raw materials for manufacturing pressure cookers in January 2020 from various suppliers in Maharashtra and then transferred certain raw materials from Maharashtra to be delivered to its factory.
In four out of the eight E-Way bills, the place of supply was correctly mentioned to be the factory of the petitioner situated at Satharia, Jaunpur. In the other four E-Way bills, the place of supply was wrongly mentioned to be the principal place of business of the petitioner situated at Kanpur, where no manufacturing is done.
The goods were intercepted on January 31, 2020, and the memo of detention was issued on February 1, 2020; subsequently, the goods were seized on February 3, 2020, by issuing MOV-06.
Advocate Shubham Agarwal submitted that due to an inadvertent error or oversight by the accountants of the suppliers who generate the E-Way bill, they failed to change the place of supply, which is automatically displayed.
The delivery of raw materials cannot be taken by the petitioner at Kanpur, as the raw materials are required for the manufacturing of pressure cookers only at its factory in Satharia, Jaunpur, and not at the principal place of business. Thus, the mention of the wrong place of supply in the E-Way bill was merely a technical breach.
Attorney Ravi Shanker Pandey, however, argued that the error/mistake in this case was grave in nature and raised a presumption of evasion of tax. The Court observed that upon a perusal of the detention order, the order imposing penalty, and the order passed in appeal, a common thread appears to run through the same, i.e., there was noncompliance of the Rules by putting the wrong address in four of the e-way bills. The invoices and bilties in all the eight invoices and in four of the e-way bills were correct in all respects, including the address.
Undisputedly, the address in four of the e-way bills was incorrect, but this particular address was not an anonymous address but was the address of the registered office of the petitioner. The explanation provided by the petitioner with regard to a mistake on the part of the supplier to have populated the incorrect address is not far fetched, especially since the correct addresses were mentioned in all the eight invoices and the eight bilties.
The Court held that the penalty imposed in this particular case was without any basis in law, and accordingly, the Court quashed and set aside the penalty order dated February 14, 2020 and the order passed in appeal dated October 13, 2020.
