The Allahabad High Court has held that the mismatch in goods description and missing e-way bill establishes tax evasion intention.
The bench of Justice Rohit Ranjan Agarwal has observed that an intention to evade the tax is there as not only the goods in transit were not accompanied by e-way bill but also the description of goods declared by petitioner was different which was intercepted by the department. Goods declared were taxable at the rate of 5% while the goods found on verification were taxable at the rate of 18%.
The petitioner/assessee is a registered dealer under State Goods and Service Tax Act, 2017. He has sold 400 bags of Arecanut vide tax invoice dated 09.06.2022 to M/s. Jagdamba Enterprises, Nagpur which is also said to be a registered dealer in his respective State.
The Arecanut was being transported from Delhi to Nagpur, Maharastra by M/s. Ravi Goods Transport. The goods were intercepted at Mathura at 4:28 a.m. on 10.06.2022. The goods while in transit were not carrying the e-way bill.
The e-way bill was generated on 10.06.2022 at 7:36 a.m. and was valid till 16.06.2022. A physical verification of consignment of goods was carried out. A detention order was passed on 16.06.2022 under Section 129(1) of the GST Act, 2017.
On verification, it was found that the goods which were in transit is Chikni Bhuni Supari (processed Arecanut) and is taxable @ 18% and not @5% as declared by the petitioner. A show-cause notice was issued on 16.06.2022.
When the show-cause notice remained unattended, order under Section 129(3) was passed and a demand of tax and penalty was raised against the petitioner.
The petitioner filed Writ Tax before the Division Bench of this Court which was dismissed on the ground that petitioner has remedy of filing an appeal under Section 107 of the GST Act, 2017.
Thereafter, an appeal under Section 107 of the GST Act was preferred by petitioner before Additional Commissioner, Grade-II (Appeal), Aligarh which was rejected by order.
The petitioner contended that the detention order as well as penalty order have been passed without giving any opportunity of hearing. The first appellate authority has not applied its mind while rejecting the appeal and a non-speaking order has been passed. The person who had downloaded the e-way bill was not present at the place of detention and the driver of the vehicle had moved out without intimation to the petitioner. As soon as the driver realised the mistake and informed the petitioner about the non availability of the e-way bill, it was downloaded without delay and produced before the authorities.
The sole question for consideration is whether carrying e-way bills is mandatory for the movement of goods from one place to another.
The court noted that the goods were intercepted by respondent, while the e- way bill was generated on the same day at 7:36 a.m. about three hours after the detention of the goods. Moreover, on inquiry it was found that the petitioner was not carrying out the business at the place where the firm was registered. The registration of the firm was also cancelled.
The court while dismissing the petition held that It is mandatory on the part of the seller to download the e-way bill once the goods are put in transit. Subsequent downloading of e-way bill would not absolve the liability under the Act.
Case Details
Case Title: M/S Gurunanak Arecanut Traders Versus Commercial Tax And Another
Case No.: Writ Tax No. – 1177 Of 2022
Date: 05.03.2025
Counsel For Petitioner: Pooja Talwar
Counsel For Respondent: C.S.C
