The Goods and Services Tax Appellate Tribunal (GSTAT), Varanasi Bench, has dismissed an appeal concerning a ₹5,53,446 penalty imposed under Section 129 of the GST law, holding that the second e-way bill generated after expiry of the original document was not a mere technical or typographical lapse but was the result of fraud and deception intended to facilitate tax evasion.

The Bench of Narendra Bahadur Yadav (Judicial Member) and Ananjai Kumar Rai (Technical  Member) has observed that  the second e-way bill appeared to have been generated through fraud and deception and that goods of similar nature to those covered by the original invoice were transported from an uncertain location with the intention of evading tax. 

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The case arose from the transportation of paints and allied products from Manjusar, Gujarat, to Bihta, Bihar. A tax invoice was generated on August 10, 2024, and the first e-way bill was also generated on the same date. The e-way bill showed a transportation distance of 1,727 kilometres and was valid until August 19, 2024.

The goods were initially proposed to be transported through specified vehicles from Manjusar to Ahmedabad and thereafter towards Bihta, Bihar. However, a second e-way bill was generated on August 22, 2024, showing a different vehicle and a different place of origin—Kachora Ghat, Etawah, Uttar Pradesh. The second e-way bill was valid until August 31, 2024. 

The vehicle bearing registration number UP 84 AT 8847 was subsequently intercepted by the Uttar Pradesh tax authorities in Ballia district, near the Bihar border. The authorities initiated proceedings and imposed a penalty on the appellant.

The original adjudicating order and subsequent appellate order were challenged before the GSTAT. 

The appellant contended that the second e-way bill had been generated because the vehicle had allegedly broken down in the Orai area of Uttar Pradesh on August 19, 2024.

It was argued that the transporter received information regarding the breakdown from the driver only on August 22, 2024, and that the delay and subsequent generation of the second e-way bill were circumstances beyond the appellant’s control.

The appellant also argued that there was no intention to evade tax and that the alleged lapse was merely technical and procedural. According to the appellant, there was no loss of revenue to the Government.

It was further contended that the authorities had not provided sufficient opportunity of hearing, raising an issue concerning principles of natural justice. 

The Tribunal framed the central issue as whether the goods had been transported without valid documents with an intention to evade tax and with mala fide intent at the time of interception.

It noted that Section 129 applies where goods are transported or stored in transit in contravention of the provisions of the GST law or the rules governing such transportation. The Tribunal also referred to Rule 138 of the CGST/UPGST Rules, under which an e-way bill is required before movement of goods where the prescribed threshold is crossed. 

The Tribunal observed that Rule 138(10) provides for extension of an e-way bill within the prescribed period after its expiry. According to the Tribunal, the law did not authorise the generation of a fresh e-way bill on the basis of the same invoice after the original e-way bill had expired.

In the present case, the original e-way bill expired on August 19, 2024, while the second e-way bill was generated only on August 22, 2024. The Tribunal therefore held that the second e-way bill had been generated after a gap of three days and without authority of law. 

The Tribunal considered the appellant’s explanation that the vehicle had broken down in Orai but found that the claim was not supported by reliable evidence.

It noted that the appellant had not explained how the vehicle covered only around 950 kilometres from Manjusar to Orai over more than nine days. The Tribunal also found that there was no reliable proof establishing that a breakdown had actually occurred in Orai on August 19, 2024.

The affidavit relied upon by the appellant was also found insufficient. The Tribunal noted that the affidavit filed by Dinesh Kumar before the appellate authority did not contain a traceable address or identity of the deponent. Further, neither the driver’s statement nor evidence showing that the vehicle had actually been repaired was produced. 

The Tribunal further observed that the appellant did not disclose the actual location of the alleged breakdown in Orai. There was also no satisfactory explanation regarding how the goods were subsequently transported from Orai to Kachora Ghat, Etawah, from where the second e-way bill showed the goods as being transported.

According to the Tribunal, these circumstances created serious doubts regarding the validity of the second e-way bill. 

The Tribunal also examined the movement of the vehicle after the second e-way bill was generated.

It noted that the vehicle was intercepted in Ballia district, more than 500 kilometres away from Kachora Ghat, Etawah. According to the Tribunal, the vehicle had covered this distance within approximately 24 hours.

At the same time, the original e-way bill contemplated transportation of goods over 1,727 kilometres from Manjusar through Ahmedabad to Bihta, with validity up to August 19, 2024.

The Tribunal observed that while the vehicle was allegedly able to cover more than 500 kilometres from Kachora Ghat to Ballia within about a day, it had covered only around 950 kilometres from Manjusar to Orai during more than nine days. 

The Tribunal found the discrepancy significant while examining the appellant’s explanation regarding the delay.

A significant aspect of the ruling concerned the invoice number mentioned in the second e-way bill.

The Tribunal noted that the original invoice number was “1147”, whereas the second e-way bill contained an additional “0” before the invoice number. It observed that the GST system would ordinarily not permit generation of a second e-way bill mentioning the same invoice number after an e-way bill had already been generated.

According to the Tribunal, insertion of the additional “0” enabled the second e-way bill to be generated. 

The Tribunal consequently rejected the contention that the discrepancy could be treated merely as a typographical error.

It held that the second e-way bill could not be placed in the category of a document containing a simple clerical or typographical mistake because its generation involved insertion of “0” before invoice number “1147”. 

The Tribunal considered judicial precedents cited by both sides.

The appellant relied upon decisions including Assistant Commissioner (ST) v. Satyam Shivam Papers Pvt. Ltd., where the courts had emphasised that penalty proceedings under Section 129 require consideration of an intention to evade tax. The Tribunal noted the principle that penalties may not be justified where goods could not reach their destination within the prescribed time because of circumstances such as road blockage or vehicle breakdown. 

The State, on the other hand, relied upon the Allahabad High Court’s decision in M/s Lalitpur Power Generation Company Ltd. v. State of U.P., where penalty under Section 129 was upheld in circumstances involving expired and mismatched e-way bills and failure of the taxpayer to rebut the presumption of intent to evade tax. 

The Tribunal also considered Maruti Enterprises v. State of U.P., in which the Allahabad High Court dealt with the authority of the transit State and circumstances involving valid documents and clerical or typographical errors. The Tribunal, however, found that the facts of the present case were materially different because the goods were shown as having been loaded from Kachora Ghat rather than Ahmedabad. 

The Tribunal emphasised that proceedings under Section 129 are civil in nature and that the applicable standard involves assessment on the basis of the preponderance of probabilities.

It referred to Supreme Court decisions concerning evaluation of evidence and adverse inference where the best evidence is withheld. 

After examining the circumstances collectively, the Tribunal found several factors significant: the unexplained delay in transportation, absence of reliable evidence regarding the alleged breakdown, lack of explanation for movement from Orai to Kachora Ghat, and the subsequent generation of the second e-way bill.

The Tribunal held that these circumstances undermined the appellant’s explanation that the second e-way bill had been generated bona fide. 

The GSTAT ultimately dismissed the appeal and affirmed the orders passed by the authorities below.

The penalty confirmed amounted to ₹5,53,446, with the order recording no separate tax or interest component in the quantified demand. 

The Tribunal concluded that the e-way bill dated August 22, 2024 could not be regarded as a mere technical document error. Instead, based on the surrounding circumstances and evidence available on record, it held that the document was the product of fraud and deception associated with an intention to evade tax.

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