The Goods and Services Tax Appellate Tribunal (GSTAT) has set aside a GST penalty of ₹6,06,844 imposed on a trader after authorities alleged that goods were being transported again using previously verified E-Way Bills. 

The order was passed by a Bench comprising Santosh Kumar Srivastava, Member (Judicial), and Arvind Kumar, Member (Technical) has observed that mere suspicion or repeated verification of an E-Way Bill cannot establish re-transportation or an intention to evade tax unless supported by cogent evidence.

The dispute arose from the transportation of goods from Nayaganj, Kanpur, to Fatehpur in vehicle. The consignment was accompanied by tax invoices dated March 1, 2022, along with two E-Way Bills generated on the same day.

Buy Now: 130 GST Judgments – E-Magazine July 2026

The Mobile Squad, State Tax, Kanpur, initially checked the vehicle at Jhakarkatti at around 1:27 p.m. and scanned the E-Way Bills through the E-Way Bill Scan App. The same vehicle was subsequently checked at around 9:52 p.m. at Jhakarkatti/Cooperganj.

The department treated the second interception as evidence that the documents had already been used for an earlier movement and were being reused for transporting another consignment. On that basis, proceedings were initiated under Section 129 of the CGST/UPGST Act, which deals with detention, seizure and release of goods and conveyances during transportation.

The goods were valued at approximately ₹2,65,650, while the authorities raised a total demand of ₹6,06,844, comprising penalty and cess-related amounts.

The taxpayer disputed the allegation of repeated transportation and maintained that the goods were being transported for the first time on valid tax documents.

According to the taxpayer, the E-Way Bills had been generated at around 6:17 a.m. and 6:19 a.m. on March 1, 2022, and remained valid until March 2, 2022. Therefore, the goods were admittedly within the validity period when the vehicle was detained at approximately 9:52 p.m.

The taxpayer also explained the considerable time gap between the two checks by stating that the vehicle had suffered a breakdown while travelling from Jhakarkatti towards Cooperganj. A repair bill was submitted in support of the explanation, along with an affidavit of the driver.

The taxpayer argued that these materials were not properly considered by the Mobile Squad. It was also contended that the department had not produced any independent evidence showing that the goods had already been delivered and were subsequently loaded again.

The First Appellate Authority rejected the taxpayer’s explanation and upheld the original proceedings.

According to the appellate authority, the fact that the vehicle had already been checked and the E-Way Bills verified earlier in the day, followed by another interception several hours later, indicated that the documents were being reused.

The authority also considered the vehicle-breakdown explanation to be an afterthought and concluded that the goods were being transported more than once on the same documents with an intention to evade tax.

The taxpayer thereafter approached GSTAT challenging the appellate order.

The Tribunal examined the material placed on record and found that the department had failed to establish through independent and cogent evidence that the goods had already completed an earlier journey.

The Tribunal observed that the conclusion regarding re-transportation was principally drawn from the earlier verification and location of the E-Way Bill. However, there was no independent material establishing that the same goods had already been delivered and were subsequently being transported again.

Importantly, the Tribunal noted that the department had not produced evidence such as toll-plaza movement or other material demonstrating that the goods had actually undergone an earlier completed transportation.

A central legal issue before the Tribunal was whether an intention to evade tax could automatically be inferred merely because an E-Way Bill had earlier been verified.

The Tribunal rejected such an approach and held that intention to evade tax cannot be presumed merely from suspicion. A presumption of tax evasion cannot substitute for proof of the underlying statutory contravention.

The Tribunal relied upon a series of judicial precedents emphasising that suspicion, however strong, cannot take the place of legal proof.

It referred, among others, to the Supreme Court’s decision in Assistant Commissioner (ST) v. M/s Satyam Shivam Papers Pvt. Ltd., as well as the Allahabad High Court’s decisions in M/s Shri Surya Traders v. Union of India, M/s Anandeshwar Traders v. State of U.P., and M/s B.L. Agro Oils Ltd.

The Tribunal found the principles laid down in the earlier decisions to be applicable to the present dispute.

In particular, it relied upon the principle that it is for the seizing authority to establish through evidence that an E-Way Bill was actually reused. A mere assertion in the seizure order that the E-Way Bill had been used twice, without supporting material, was not sufficient.

The Tribunal also noted that where the taxpayer asserts that goods were not previously transported, the department cannot simply reject that explanation through an unsupported presumption. The authority must undertake factual verification and place material on record establishing the alleged earlier movement.

Another significant aspect considered by the Tribunal was the taxpayer’s explanation concerning the delay in movement.

The taxpayer had produced a repair bill for the vehicle and an affidavit of the driver. The Tribunal observed that the respondent had failed to establish that the repair bill was fake or forged.

Thus, the explanation for the time gap between the two checks could not simply be discarded as an afterthought without evidence disproving it.

The Tribunal found that the department had the ability to conduct further verification from the seller or purchaser to determine whether the goods had actually been delivered earlier or reloaded, but no such independent verification was established on record.

The Tribunal further noted that the goods were accompanied by the relevant tax invoice, e-invoice and E-Way Bill, and there was no discrepancy in the description, quantity or value of the goods.

The E-Way Bills were valid at the time of detention. The value adopted for the proceedings was also consistent with the transaction documents.

Therefore, the Tribunal found no material demonstrating that the transportation itself was contrary to the GST law.

The Tribunal specifically disagreed with the First Appellate Authority’s observation that transportation of goods on documents allegedly used earlier automatically established an intention to evade tax.

It held that the department had failed to prove the alleged reuse of the E-Way Bill as well as the corresponding intention to evade tax.

The Tribunal also considered the appellate authority’s reliance on the Allahabad High Court judgment in M/s Falguni Steels v. State of U.P. and Others. According to the Tribunal, that decision itself recognised the requirement for the department to establish the intention to evade tax. Since that requirement had not been satisfied in the present matter, the decision did not support the revenue’s case.

Concluding that the department had failed to establish any contravention of the GST Act or Rules, GSTAT allowed the appeal.

The Tribunal set aside the appellate order dated October 11, 2023, passed by the Additional Commissioner, Grade-II (Appeal), Kanpur. It also set aside the original order dated March 8, 2022, passed under Section 129 of the CGST/UPGST Act.

GSTAT directed that the ₹6,06,844 deposited pursuant to the detention and penalty proceedings be refunded to the taxpayer in accordance with law.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: Tax Evasion Can’t Be Presumed From Suspected Reuse of E-Way Bill: GSTAT