The GST Appellate Tribunal (GSTAT), Lucknow Bench, has held that transportation of taxable goods without an E-Way Bill, in the circumstances of the case, could not be treated as a mere procedural lapse.
The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) found that the absence of the electronically generated E-Way Bill at the time of interception, coupled with the manner in which the transaction was documented and the short distance between the loading and delivery locations, established an intention to evade tax.
The case arose from the interception of a vehicle bearing registration number UP-25 CT-8554 on March 8, 2018, by Mobile Squad Unit III, Bareilly. The vehicle was carrying iron scrap weighing 55.55 kg and valued at ₹83,323.
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Although the goods were accompanied by a tax invoice and other documents, the vehicle did not carry an E-Way Bill at the time of interception. The authorities accordingly initiated proceedings under Section 129 of the UPGST Act. The Proper Officer subsequently passed an order dated March 9, 2018, confirming tax of ₹15,000 and penalty of ₹15,000, aggregating to ₹30,000.
The First Appellate Authority later allowed the taxpayer’s appeal under Section 129(3), primarily on the ground that the E-Way Bill had subsequently been produced while submitting a reply before the seizing authority.
The department challenged that decision before GSTAT.
The Department contended that the goods were admittedly being transported without a valid E-Way Bill at the crucial point of interception. According to the Revenue, the E-Way Bill mechanism is designed to provide an electronic trail of movement of goods and prevent manipulation of transactions.
The Department emphasised that while the tax invoice was manually generated, the E-Way Bill is generated electronically and is time-stamped. Consequently, permitting an E-Way Bill generated only after interception to cure the original violation would, according to the Revenue, defeat the purpose of Rule 138.
The Department further argued that if the vehicle had not been intercepted, the movement of goods could have been completed without the transaction entering the statutory electronic monitoring mechanism.
Another circumstance relied upon by the Department was the route of transportation. The goods were shown as loaded at Baheri, Bareilly, Uttar Pradesh, while the destination was Kichha, Uttarakhand, approximately 25 kilometres away. The Revenue submitted that the transportation of iron scrap without an E-Way Bill, despite the proximity of the destination, reinforced the inference of tax-evasion intent.
The respondent did not appear before the Tribunal despite being provided opportunities to participate in the proceedings. No written submissions were filed to rebut the grounds raised by the Department.
The Tribunal therefore noted that there was no material before it to dislodge the Revenue’s case.
The Tribunal found it undisputed that the goods were not accompanied by an E-Way Bill when they were being transported.
It examined Rule 138(1) of the GST Rules, under which a registered person causing movement of goods of consignment value exceeding ₹50,000 is required, before commencement of movement, to furnish the prescribed information electronically on the common portal, resulting in generation of a unique E-Way Bill number.
The Tribunal observed that the E-Way Bill is an integral part of the statutory mechanism for monitoring the movement of taxable goods.
The First Appellate Authority had relied upon several judicial precedents where courts had granted relief in circumstances involving subsequent production of an E-Way Bill or where the authorities had failed to establish an intention to evade tax.
Among the decisions considered were Singh Tyre v. State of U.P., M/s Harle Foods Products Pvt. Ltd. v. State of U.P., M/s Modern Traders v. State of U.P., and M/s Raj Iron and Building Material v. UOI. These decisions had, in different factual contexts, treated the absence or delayed production of an E-Way Bill as insufficient by itself to justify seizure or penalty, particularly where tax evasion was not established.
The Tribunal, however, held that those precedents did not apply to the facts before it.
A key aspect of the Tribunal’s reasoning was the distinction between the manually issued tax invoice and the electronically generated E-Way Bill.
The Tribunal observed that the tax invoice was issued manually, whereas the E-Way Bill had to be generated online. In its view, preventing generation of the E-Way Bill could enable manipulation of the books and transaction records.
On this factual assessment, the Tribunal concluded that the transaction could not be treated as involving merely a technical or procedural breach. Rather, it found that transporting the goods without an E-Way Bill in the circumstances of the case established an intention to evade tax.
The Tribunal also attached significance to the fact that the goods were loaded at Baheri in Bareilly and were destined for Kichha in Uttarakhand, with the distance between the two locations stated to be approximately 25 kilometres.
According to the Tribunal, this circumstance, considered along with transportation of iron scrap without an E-Way Bill, further supported the conclusion that there was an intention to evade tax. The Tribunal expressly held that, in the facts of the case, the intention to evade tax was “crystal clear.”
After examining the record and the competing reasoning, the GSTAT concluded that the First Appellate Authority had erred in interfering with the order passed under Section 129(3).
The Tribunal held that the original adjudicating authority had correctly invoked Section 129 of the UPGST Act. It accordingly allowed the Revenue’s appeal and restored the original order dated March 9, 2018, which imposed ₹15,000 tax and ₹15,000 penalty.
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