The Goods and Services Tax Appellate Tribunal (GSTAT), Chandigarh, has held that a GST demand cannot be sustained merely on the value of goods reflected in e-way bills without other evidence establishing taxable supplies or non-payment of tax.

The bench of Jatinder Pal Singh (Judicial Member) and Pradeep Kumar Goel (Technical Member) set aside a ₹36.93 lakh tax demand against a job worker after finding that the disputed e-way bills related to goods belonging to principal manufacturers, sent for processing and returned after completion of job work.

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The dispute concerned the financial year 2020–21. According to the order, the taxpayer had declared tax liability of ₹1,10,069 in GSTR-3B, whereas the department calculated liability of ₹38,03,254 from e-way bill data.

The difference of ₹36,93,185 formed the basis of a show cause notice dated November 28, 2024.

The adjudicating authority confirmed the IGST demand under Section 73 of the Central Goods and Services Tax Act, 2017, together with interest and a penalty of ₹3,69,319. It relied on 24 e-way bills which, according to the department, represented supplies not disclosed in GSTR-1 or subjected to tax through GSTR-3B.

The authority also considered the taxpayer’s initial portal screenshot insufficient because it covered only May 2020. The first appellate authority subsequently upheld the demand.

The taxpayer explained that it undertook job work involving the cutting of hot-rolled sheets and did not independently supply the goods covered by the disputed e-way bills.

It maintained that the goods belonged to principal manufacturers, while its own taxable supply consisted of processing services. It issued invoices for job work charges, disclosed those invoices in its returns and discharged the corresponding GST.

The taxpayer further submitted that the principal manufacturers generated the e-way bills both when sending goods for processing and when receiving the processed goods back.

Its central objection was that the department had treated the consignment value of another person’s goods as its taxable turnover without establishing that it had supplied those goods.

Before the Tribunal, the taxpayer submitted a table covering the 24 disputed entries and supporting documents for a representative transaction involving Shankar Cylinders Pvt. Ltd.

A delivery challan dated January 7, 2021 recorded the dispatch of an HR coil valued at ₹13,48,370. It expressly indicated that the material was being dispatched for job work and was not for sale.

The corresponding e-way bill, generated by the principal manufacturer, described the movement as outward job work. A transporter’s consignment note also supported the dispatch of the goods to the taxpayer for processing.

After completing the work, the taxpayer issued an invoice dated February 10, 2021 for ₹16,842, inclusive of IGST of ₹2,569. The principal manufacturer generated another e-way bill for the return movement, identifying it as inward job work returns.

The Tribunal found that these documents established the nature of the activity and the movement of the principal manufacturer’s goods for processing and return.

The Tribunal also rejected the first appellate authority’s interpretation that a principal manufacturer could generate the relevant e-way bill only where the job worker was unregistered.

Discussing Rule 138 of the CGST Rules, the bench explained that the obligation relates to the registered person who causes the movement of goods. For inter-State movement of goods for job work, it noted that either the principal manufacturer or the registered job worker could generate the e-way bill, irrespective of consignment value.

The bench considered the correct declaration of consignor and consignee details material. In the circumstances before it, the identity of the person generating the e-way bill did not determine whether the movement represented a taxable supply by the job worker.

The first appellate authority had inferred that the taxpayer generated the e-way bills because its name and GSTIN appeared in the “from” column for return movements. The Tribunal found this inference factually incorrect: the documents showed that the principal manufacturer had generated those e-way bills.

The Tribunal noted that the show cause notice originated from a Directorate General of Analytics and Risk Management report highlighting differences between e-way bill data and tax declared and paid in GSTR-3B.

However, the notice contained no evidence that the taxpayer had supplied the goods covered by those e-way bills, clandestinely or otherwise. The demand was also not the outcome of an investigation establishing that the movements constituted taxable supplies of goods by the taxpayer.

The department’s basis was that the goods’ value had not been declared in GSTR-1 and corresponding tax had not been paid in GSTR-3B.

Against this, the taxpayer’s documents demonstrated that the e-way bills concerned goods sent by principal manufacturers for job work and received back after processing.

The Tribunal concluded that, in the absence of other evidence clearly establishing evasion or non-payment of tax, there was no legal basis to demand tax merely on the value of goods declared in e-way bills.

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