When e-way bill generated prior to detention order, there could not be an intention to evade payment of tax.
In a recent judgment, Hon’ble Allahabad High Court has quashed penalty order under section 129(3) of the GST Act as the e-way bill was generated much prior to the detention order, and therefore, there could not be an intention to evade payment of tax.
ABCAUS Case Law Citation:
4861 (2025) (11) abcaus.in HC
In the instant case a writ petition was filed against the impugned appellate order passed by the Additional Commissioner confirming the penalty order under section 129(3) of GST Act passed by the Assistant Commissioner, GST.
The Petitioner was a trader of TMT iron bars. The goods in question were dispatched by road for which tax invoice was generated, but the e-way bill could not be generated due to some technical glitch, but the same was generated thereafter.
The vehicle carrying goods was intercepted by the Mobile Squad and on inspection, e-way bill was not found. The vehicle in question was intercepted at 11.29 a.m. and show cause notice was issued, to which the petitioner submitted a detailed reply, along with the copy of e-way bill.
However, being not satisfied with the same, the goods were seized and penalty order under section 129(3) of the GST Act was passed. The appeal against which was dismissed by Appellate Authority.
Before the Hon’ble High Court the Petitioner submitted that the appellate authority recorded a finding that the goods were detained and checked at 11.29 a.m. but the e-way bill was generated before the interception, i.e., at 10.59 a.m. on the same date and therefore, there was no intention to evade payment of tax. In support of his submissions, the Petitioner placed reliance on the judgement of the High Court
On the other hand the Department submitted that the e-way bill, which was required under the GST Act, was not accompanying with the goods. In support of his submissions, it also placed reliance on the judgement of the Division Bench of the High Court. It was further submitted that if the petitioner was permitted to carry on the transaction without e-way bill, the same will give a handle for evasion of tax.
The Hon’ble High Court observed that it was not in dispute that the goods in question were being transported along with tax invoice, but when the goods were detained and seized at 11.29 a.m. the e-way bill was generated much prior thereof, i.e., at 10.59 a.m. Along with the reply, the said e-way bill was produced, but the same was not accepted and the impugned order was passed.
The Hon’ble High Court opined that once the e-way bill has been produced, which was generated prior to the detention and physical verification, no adverse view can be drawn against the petitioner as held by the Court in the decision relied upon by the Petitioner.
Regarding the reliance placed by the Department on the judgment of the Division Bench, the Hon’ble High Court observed that in the said case, the e-way bill was not generated prior to the detention or seizure of the goods, but the same was generated after detention order was passed and therefore, the said judgement was of no help to the State.
The Hon’ble High Court held that since in the instant case, the e-way bill was generated much prior to the detention order, therefore, there was no intention to evade payment of tax.
Accordingly, the impugned orders were quashed being unsustainable in the eyes of law.
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