Where goods intercepted in transit not accompanied by e-way bill but also description of goods declared was different and taxable at higher rate, there was an intention to evade tax.
In a recent judgment the Hon’ble Allahabad High Court has held that where the goods intercepted in transit was not accompanied by e-way bill but also the description of goods declared was different and taxable at higher rate, there was an intention to evade tax. 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.
ABCAUS Case Law Citation:
4447 (2025) (03) abcaus.in HC
In the instant case the assessee had filed a writ petition challenging the order passed by Commercial Tax Officer exercising power under Section 129(1) of the UP Goods and Service Tax Act, 2017 (the Act), order passed under Section 129(3) of the Act and order of first appellate authority rejecting the appeal.
The petitioner was a registered dealer under the UPGST Act. He has sold goods vide tax invoice to a registered dealer in his other State. The said goods was being transported from Delhi to Maharastra by a Transporter.
The goods were intercepted at in UP. The goods while in transit were not carrying the e-way bill. The e-way bill was generated on the next date of invoice. A physical verification of consignment of goods was carried out. A detention order was passed under Section 129(1) of the Act. On verification, it was found that the goods which were in transit was wrongly described and was taxable @ 18% and not @5% as declared by the petitioner.
A show-cause notice was issued. However, the show-cause notice remained unattended, and the order under Section 129(3) of the Act was passed and a demand of tax and penalty was raised against the petitioner.
Aggrieved by the said order, petitioner filed Writ before the Division Bench of the Hon’ble High Court which was dismissed on the ground that petitioner had remedy of filing an appeal under Section 107 of the Act.
Thereafter, an appeal under Section 107 of the Act was preferred by petitioner before Additional Commissioner was rejected by the order impugned.
Before the Hon’ble High Court, the Petitioner submitted that the detention order as well as penalty order was passed without giving any opportunity of hearing. It was further submitted that first appellate authority had not applied its mind while rejecting the appeal and a non-speaking order had been passed.
According to the Petitioner, 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, the same was downloaded without delay and produced before the authorities. On this count, the Petitioner placed reliance on several decisions of High Courts including decision of the Co-ordinate Bench and Kerala High Court
Further, it was submitted that the misclassification of goods cannot be basis of detention of goods in transit. The taxing authorities could at the most detained the goods for purpose of preparing the relevant papers for effective transmission to the judicial assessing officers and nothing beyond.
The Revenue submitted that the driver of the vehicle in his statement stated that goods were taken from other vehicle and it was loaded in the vehicle later. The firm had neither main place of business nor additional place of business at that place of reloading. Further, place of dispatch in subsequent e-way bill issued reflects a different address. It was submitted that it showed that registration was being misused to hide the original source of transportation and clearance of goods. On the basis of GSTIN deficiencies found in checking of seller firm, an investigation of the seller firm was initiated. As per inquiry report place of business of firm was not found to be traceable and marked for suo moto cancellation of the firm.
The Hon’ble High Court observed that the sole question for consideration was whether carrying e-way bill is mandatory for the movement of goods from one place to another. The question is no more res integra after the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017 which came into effect from 01.04.2018. Post amendment in the Rule, it has become obligatory that goods should be accompanied with e-way bill. The co-ordinate Bench had held that in case goods are not accompanied by e-way bill, a presumption may be read that there is an intention to evade tax. However, such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods.
The Hon’ble High Court further observed that the co-ordinate Bench held that mere furnishing of documents subsequent to interception cannot be a valid ground to show that there was no intention to evade tax.
The Hon’ble High Court noted that in the instant case, it was an admitted case that the goods were intercepted by GST authorities, and the eway bill was generated on the same day later after about three hours after the detention of the goods. Moreover, on the 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 suo moto cancelled.
The Hon’ble High Court opined that conduct of the petitioner clearly revealed that an intention to evade the tax was 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 taxing authorities. Goods declared were taxable @5% while the goods found on verification were taxable @18%.
The Hon’ble High Court 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.
Accordingly, writ petition was dismissed.
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