“Court Ruling: Burden of Proof in Tax Evasion Cases”

Background:

Justice Shekhar B Saraf, in a ruling on the penalty under Section 129 of the Uttar Pradesh Goods and Service Tax Act, 2017, emphasized that while petitioners must demonstrate absence of tax evasion, the burden falls on the department to prove intentional tax evasion for clerical errors.

Petitioner’s Argument:

During proceedings, the petitioner’s counsel argued that a minor error on the e-way bill, namely an incorrect vehicle number, was not indicative of deliberate tax evasion, supported by the absence of discrepancies in goods or other documents.

Court Verdict:

The court, in its verdict on February 19, granted the writ petition by M/S Indeutsch Industries Private Limited, overturning GST authorities’ orders from June 22, 2019, and June 22, 2018.

Judicial Interpretation:

It highlighted the necessity for proving intentional tax evasion, which the department failed to do, and criticized the appellate authority for not considering all documents provided by the petitioner.

Conclusion:

The recent ruling by Justice Shekhar B Saraf underscores the importance of the burden of proof in cases of alleged tax evasion. The court’s decision highlights that while taxpayers have a responsibility to ensure accurate documentation, minor clerical errors should not automatically result in penalties. Instead, tax authorities must demonstrate deliberate intent to evade tax before imposing penalties. This verdict serves as a reminder of the need for thorough examination of evidence and consideration of all relevant factors in tax evasion cases, ultimately upholding fairness and justice in tax administration.