The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench at Agra, has held that cancellation of an e-way bill does not, by itself, conclusively establish that goods were transported without payment of tax. Equally, a taxpayer’s chart linking cancelled e-way bills with subsequently generated bills cannot be accepted as conclusive proof without verification of the electronic records and actual movement of goods.

The Bench of Ajeet Singh (Judicial Member) and Vivek Kumar (Technical Member) set aside both the original adjudication order and the first appellate order granting relief to the dealer. It remanded the matter for fresh adjudication after transaction-wise verification, leaving the ultimate question of tax liability open.

BUY NOW: E-Way Bill Judgements From 2020–2026 [Includes Orders of GSTAT]

During the financial year 2020–21, the authorities found that 81 e-way bills relating to the dealer had been cancelled and initiated proceedings under Section 73 of the applicable GST enactment.

The dealer did not submit a reply to the notice before the adjudicating authority. Consequently, the authority decided the proceedings ex parte and passed an order dated February 25, 2025, determining the tax and penalty.

The dealer challenged the order before the Additional Commissioner, Grade-II (Appeal), Agra. It explained that the original e-way bills had been cancelled inadvertently because of errors and that fresh e-way bills were subsequently generated for the same transactions. According to the dealer, the goods were transported under those fresh, valid bills.

To support its explanation, the dealer furnished a chart setting out the cancelled e-way bills and the corresponding replacement bills. The first appellate authority accepted the explanation and, by an order dated June 25, 2025, set aside the adjudication order.

The Commissioner, State Tax, through Deputy Commissioner challenged that relief before the Tribunal.

The Department argued that the dealer had not satisfactorily explained why as many as 81 e-way bills had been cancelled. It submitted that a chart showing replacement bills could not establish either that the cancelled bills were never used for transportation or that the fresh bills related to precisely the same transactions.

The Department also contended that the first appellate authority had not verified the dates and exact timings of cancellation and regeneration from the GST portal. Nor had it examined whether the cancelled and replacement bills matched in their quantity, value, consignor, consignee, vehicle number and other particulars.

A central issue, according to the Department, was whether any of the cancelled bills had actually been used to transport goods. It further argued that most of the bills concerned short distances, making factual verification of the movement of goods particularly relevant.

The dealer defended the first appellate order, maintaining that the cancellations were inadvertent and that there was no intention to evade tax.

Its counsel, Manu Kulshreshtha, specifically submitted that no goods had been transported under the cancelled bills. The dealer asserted that fresh bills had been generated in their place and that the chart furnished before the first appellate authority adequately explained the transactions.

The Department was represented by authorised representative Mukesh Kumar.

The Tribunal found that the dealer’s explanation required verification against contemporaneous electronic records available on the GST and e-way bill portals.

It held that merely producing a chart could not conclusively establish that the transactions reflected in the cancelled bills were never undertaken or that those bills had not been used for transportation.

Given the substantial number of cancellations, the Bench considered a proper, transaction-wise examination necessary. The reasons for each cancellation had to be identified and tested against the corresponding electronic records.

The Tribunal observed that a finding of absence of tax evasion could not appropriately rest only on an assertion that the bills were cancelled inadvertently. The surrounding records and actual movement of goods had to be examined before reaching a definitive conclusion.

At the same time, the Tribunal rejected the proposition that cancellation alone conclusively established transportation without payment of tax.

It held that the Department must establish, through appropriate factual verification, a nexus between the cancelled e-way bills and the alleged movement of goods.

The Bench also took account of the dealer’s failure to reply during the original proceedings. Nevertheless, it found that the explanation and supporting chart subsequently furnished in appeal had a direct bearing on the determination of actual tax liability and deserved proper verification.

The material therefore required examination rather than acceptance or rejection merely on the strength of the chart.

The Tribunal directed the adjudicating authority to verify each of the 81 cancelled bills, including the reason for cancellation and whether a corresponding fresh bill had actually been generated.

The authority must examine the generation and cancellation dates and timings, compare the particulars of the original and replacement bills, and determine whether the fresh bills were valid and operative when the goods moved.

The inquiry must also establish whether any cancelled bill was used for actual transportation. Relevant particulars include the consignor, consignee, invoice number and date, description and quantity of goods, taxable value, tax amount and vehicle number.

The Tribunal directed verification of the electronic portal records and required the dealer to be given a reasonable opportunity of hearing. The dealer may furnish the original and fresh e-way bills, invoices, transport documents and other supporting material.

After considering the evidence from both sides, the adjudicating authority must pass a fresh, reasoned and speaking order.

The Tribunal allowed the departmental appeal in part and remanded the dispute for fresh consideration.

The Tribunal expressly left open whether the cancelled bills had been used for transportation and whether the replacement bills represented the same transactions. Those questions will be determined on the evidence gathered during fresh adjudication.

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