No Toll Plaza Receipts Needed to Prove “Actual Movement” When E-Way Bills, Bank Payments, GST Returns Exist: Allahabad HC

The Allahabad High Court has held that no toll plaza receipts needed to prove “actual movement” when e-way bills, bank payments & GST returns exist; state GST cannot probe central assessees without cross-empowerment; section 74 demands specific proof of fraud, not vague ‘circular trading’ allegations. The bench of Justice Piyush Agrawal observed that the burden of proving “actual movement of goods” does not require production of non-statutory documents such as toll plaza receipts when transactions are supported by valid e-way bills, tax invoices, banking-channel payments, and proper reflection in GST returns. State GST department lacked jurisdiction to investigate or adjudicate matters relating to Central GST assessees in the absence of a specific cross-empowerment recommendation of the GST Council and a corresponding notification or circular. The case arose from proceedings initiated against a private limited company engaged in the business of supply of agricultural goods and areca nuts, duly registered under the GST regime and regularly filing its returns. A survey was conducted at the assessee’s premises in January 2019. Based on the survey, the State GST authorities issued a show cause notice under Section 74 of the UPGST Act, alleging wrongful availment of input tax credit (ITC) on the ground that the assessee was allegedly involved in circular trading without actual movement of goods. The assessee consistently maintained that all its transactions were genuine and fully supported by statutory records. It placed on record tax invoices, e-way bills, bilty/transport documents, bank statements evidencing payments through banking channels, and GST returns including GSTR-1, GSTR-2A and GSTR-3B. It was also pointed out that the selling dealers were registered at the time of transactions and that taxes had been duly deposited and reflected on the GST portal. Despite these submissions, the adjudicating authority passed an adverse order primarily on the reasoning that the assessee failed to produce toll plaza receipts and weighbridge slips, and concluded that actual physical movement of goods had not been proved. The appellate authority affirmed the order, compelling the assessee to approach the High Court. A central plank of the assessee’s challenge was that it fell under the Central GST jurisdiction, whereas the proceedings had been initiated by State GST officers. The assessee argued that, except for limited areas such as refund under Section 54, there is no general cross-empowerment notification enabling State GST officers to investigate or adjudicate matters relating to Central assessees. It was contended that in the absence of any GST Council recommendation and enabling notification or circular, the entire proceedings were without jurisdiction. The High Court noted that this objection had been specifically raised before the authorities as well as in the writ petition, yet no material was produced by the State to justify assumption of jurisdiction. The Court held that jurisdiction under the GST framework flows from statutory empowerment and cannot be presumed. Rejecting the revenue’s insistence on toll plaza receipts, the Court held that GST law does not mandate production of toll plaza receipts as proof of movement of goods. The Court observed that where e-way bills, tax invoices, transport documents, bank payments and GST returns are available and uncontroverted, actual movement of goods stands sufficiently established. The Court described the adverse inference drawn for non-production of toll plaza receipts as perverse and legally unsustainable, noting that authorities cannot impose documentation requirements not prescribed under the statute or rules. On the invocation of Section 74, the Court reiterated that the provision applies only in cases involving fraud, wilful misstatement or suppression of facts with intent to evade tax. The Court held that the show cause notice must contain a specific categorical finding supported by evidence. Mere use of expressions such as “circular trading” or “suspicious transactions” is insufficient. Suspicion, conjecture or inference cannot substitute proof of intent. The Court found that neither the show cause notice nor the assessment order recorded any concrete finding of fraud or wilful misstatement. Consequently, the very foundation of the proceedings under Section 74 was held to be without jurisdiction. The High Court relied on several Division Bench judgments of the Allahabad High Court and also referred to the CBIC Circular dated 13 December 2023, which clarifies that Section 74 proceedings should not be initiated routinely and must be confined to genuine fraud cases supported by material evidence. The Court also distinguished the Supreme Court’s ruling in Ecom Gill Coffee Trading Pvt. Ltd., holding that the facts of the present case clearly established actual movement of goods. Allowing the writ petition, the Allahabad High Court quashed the assessment and appellate orders, declared the proceedings to be without jurisdiction and contrary to law, and directed that any amount deposited by the assessee be refunded within one month in accordance with law. Case Details Case Title: M/S Raghuvansh Agro Farms Ltd. Versus State of U.P. and 2 others Case No.: Writ Tax No. - 3829 Of 2025 Date: 17.12.2025 Counsel For Petitioner: Aditya Pandey Counsel For Respondent: C.S.C. 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No Toll Plaza Receipts Needed to Prove “Actual Movement” When E-Way Bills, Bank Payments, GST Returns Exist: Allahabad HC

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