The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow State Bench, has restored a tax and penalty demand of approximately ₹47.11 lakh in a case involving transportation of lead ingots, holding that the mere availability of invoices and e-way bills does not conclusively establish the legality of transportation when material discrepancies remain unexplained.

The Bench comprising Santosh Kumar Srivastava, Member (Judicial), and Arvind Kumar, Member (Technical) allowed the Department’s appeal, set aside the First Appellate Authority’s order and restored the original adjudication order dated February 29, 2020.

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The Tribunal examined the combined effect of supplier-wise quantity differences, inconsistencies concerning loading locations, and the generation and cancellation of e-way bills. It rejected the approach of treating the dispute as merely a minor variation in the overall weight of the consignment.

The dispute arose when a vehicle carrying lead ingots was intercepted during the intervening night of February 13 and 14, 2020, near Sikandra in Kanpur Dehat, Uttar Pradesh.

The driver produced a tax invoice, an e-way bill and a transport bilty dated February 13, 2020. The documents declared transportation of 27,839.900 kg of lead ingots, valued at approximately ₹47.14 lakh inclusive of GST, from Bajaj Enterprises to Vishal Metal Udyog in Masuri, Ghaziabad.

According to the departmental record discussed in the order, the driver stated that the goods had been loaded from three different locations in Panki, Kanpur. He denied that any goods had been loaded from Bajaj Enterprises’ declared business premises at Gadarian Purwa.

The Department considered these statements inconsistent with the declared dispatch particulars and questioned whether the accompanying documents correctly reflected the source and movement of the goods.

During physical verification, the Department recorded an aggregate weight of 27,537.400 kg, against the declared quantity of 27,839.900 kg, resulting in a shortage of 302.500 kg.

The officer also compared goods loaded in different portions of the vehicle with the quantities declared in the supplier-wise documents. Those comparisons revealed further differences requiring reconciliation.

Another issue concerned an e-way bill initially generated in the name of another firm for invoice number 72 and a quantity of 5,015 kg. That e-way bill was cancelled, and a fresh e-way bill was subsequently generated in the name of the stated supplier.

The trader explained that an accountant working for both firms had inadvertently used the wrong login credentials and corrected the mistake after detecting it.

Rejecting the explanations, the proper officer determined tax and penalty under Section 129(3) of the Uttar Pradesh GST Act, 2017. The officer also declined to accept the ownership claim and treated the case as one in which the owner of the goods had not come forward.

The First Appellate Authority allowed the trader’s appeal, quashed the original order and directed release of the goods and refund of amounts deposited, if any.

It accepted the explanation that the weight variation was minor and could arise from differences in weighing equipment. It also recognised that a trader could purchase goods from multiple suppliers and arrange their direct transportation to a buyer.

Challenging that decision, the Department argued that the discrepancies had to be examined collectively. It maintained that the case involved questions about the actual identity and source of the goods, rather than an isolated procedural lapse.

Before GSTAT, the trader maintained that the goods had been purchased from registered suppliers and sold to a registered buyer under valid invoices and e-way bills.

It submitted that the purchases and sales were reflected in returns and that payments had been made through banking channels.

The trader also disputed the departmental weighment, questioned the calibration and placement of the weighing equipment, and argued that the driver’s statement had not been supplied despite a request.

It relied on judicial decisions concerning driver statements, minor weight differences and technical errors in transportation documents.

The Tribunal held that invoices, e-way bills and transport documents are important evidence of a transaction, but their particulars must correspond with the goods actually transported and the circumstances established during inspection.

Where material discrepancies arise, the proper officer is entitled to examine whether the documents satisfactorily account for the identity, source and movement of the goods.

The Bench therefore rejected the contention that the presence of invoices and e-way bills conclusively resolved the dispute.

It found that the First Appellate Authority had failed to examine the cumulative effect of the discrepancies before setting aside the original order.

The Tribunal noted that the driver had acknowledged the physical verification report in FORM GST MOV-04. No contemporaneous objection concerning calibration, an uneven surface or the correctness of the weighment was recorded.

The trader had not produced a contemporaneous weighment slip, an independent weighment certificate or reliable technical evidence establishing that the departmental weight was incorrect.

The Bench held that general material explaining how an uneven surface could affect weighing accuracy did not demonstrate an actual error in the particular verification.

At the same time, the Tribunal clarified that every weight difference does not establish evasion. The significance of the discrepancy depends on the surrounding circumstances and whether the quantities have been satisfactorily reconciled.

The Tribunal distinguished the commercial practice of procuring goods from multiple dealers and dispatching them directly to a customer from the factual question of whether the goods intercepted matched the supplier-wise declarations.

The explanation that direct transportation avoided unnecessary unloading and reloading did not, by itself, establish correspondence between the physical quantities and the invoices.

Similarly, the Bench observed that generating and cancelling an e-way bill does not automatically establish an unlawful transaction. In this case, however, the electronic document sequence required examination alongside the quantity differences and other transport discrepancies.

The Tribunal ultimately concluded that the physical mismatch and sequential manipulation of e-way bills established an intention to evade tax in the circumstances of the case.

GSTAT set aside the appellate order dated March 12, 2020, and restored the original order dated February 29, 2020. The matter was not remanded.

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