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2025 (4) TMI 1057 - HC - GSTChallenge to penalty order - requirement to carry a valid e-way bill for the movement of goods from one place to another under the Uttar Pradesh Goods and Service Tax Act 2017 (the Act of 2017) and the related Rules - HELD THAT - 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 valid e-way bill. The co-ordinate Bench in Akhilesh Traders 2024 (2) TMI 1128 - ALLAHABAD HIGH COURT 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. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods. In Jhansi Enterprises 2024 (3) TMI 219 - ALLAHABAD HIGH COURT the co-ordinate Bench following the decision rendered in Akhilesh Traders further 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 Court further held that reliance placed upon the decision by petitioner therein was of transaction prior to April 2018 but after April 2018 those difficulties have been resolved and there is no difficulty in generating and downloading the e-way bill. In the instant case it is an admitted case that the goods were intercepted on 19.01.2023 at 3 22 pm at Lalitpur Road Jhansi. The said transit in question was being done on basis of e-way bill no. 7713 1109 2438 and e-way bill no. 4313 0563 8265. After enquiry it was found that transportation of goods was being done through different vehicle in place of the vehicle declared in Part B of the e-way bill no. 7713 1109 2438 and validity of e-way bill no. 4313 0563 8265 was only till 15.01.2023 while it was being transported on 19.01.2023. Conclusion - Carrying a valid e-way bill during the transit of goods is mandatory under the Act of 2017 and Rules post 01.04.2018. Petition dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court are: (a) Whether carrying a valid e-way bill is mandatory for the movement of goods from one place to another under the Uttar Pradesh Goods and Service Tax Act, 2017 (the Act of 2017) and the related Rules, particularly post the 14th Amendment effective from 01.04.2018. (b) Whether the discrepancies found in the e-way bills-specifically, transportation through a vehicle different from that declared in Part B of the e-way bill and transportation beyond the validity period of the e-way bill-constitute a violation of the Act and justify imposition of penalty under Section 129(1) and confirmation under Section 129(3) of the Act. (c) Whether the petitioner's contention that there was no intention to evade tax and that the discrepancies were mere errors in the e-way bills can rebut the presumption of tax evasion arising from non-compliance with e-way bill requirements. (d) The applicability and relevance of precedents relating to e-way bill compliance, especially distinguishing between cases prior to April 2018 and those after the 14th Amendment. 2. ISSUE-WISE DETAILED ANALYSIS Issue (a): Mandatory nature of carrying valid e-way bill post 01.04.2018 The legal framework governing this issue is Section 129 of the Act of 2017 and Rule 138 of the Uttar Pradesh Goods and Service Tax Rules, 2017. Rule 138 mandates that every registered person causing movement of goods with consignment value exceeding fifty thousand rupees must furnish information electronically in FORM GST EWB-01 before commencement of movement. The e-way bill generated must be valid and accompany the goods during transit. The Court referred to the 14th Amendment of the Rules effective from 01.04.2018, which made it obligatory that goods should be accompanied by a valid e-way bill. This amendment resolved earlier difficulties in generating e-way bills that existed prior to April 2018. Precedents relied upon include decisions of coordinate Benches in Akhilesh Traders and Jhansi Enterprises, which held that absence of a valid e-way bill during transit raises a presumption of intention to evade tax. The Court extracted relevant paragraphs emphasizing that such presumption is rebuttable but mere production of documents after interception does not absolve the transporter or owner from penalty liability. The penalty serves as a deterrent against tax evasion. The Court interpreted the statutory provisions and precedents to mean that carrying a valid e-way bill is a mandatory legal requirement post-April 2018 and non-compliance attracts penal consequences. Issue (b): Effect of discrepancies in e-way bills-different vehicle and expired validity The facts reveal that the goods were transported in a vehicle different from the one declared in Part B of e-way bill no. 7713 1109 2438, and the validity of e-way bill no. 4313 0563 8265 had expired on 15.01.2023, whereas transportation occurred on 19.01.2023. Section 129(1) empowers authorities to detain goods and impose penalty if goods are transported without valid documents. The Assistant Commissioner imposed penalty of Rs. 93,298/-, confirmed on appeal under Section 129(3). The Court applied Rule 138 and Section 129 to facts, concluding that the discrepancies amounted to non-compliance with mandatory e-way bill requirements. The use of a different vehicle than declared and transportation beyond e-way bill validity period violated the provisions, justifying penalty imposition. Competing arguments by the petitioner that these discrepancies were minor errors without intention to evade tax were examined. The Court noted that the presumption of evasion arises from such non-compliance and the petitioner failed to provide reasonable grounds to rebut this presumption. Issue (c): Rebuttal of presumption of tax evasion by petitioner's explanation The petitioner contended that all required documents (tax invoices, consignment notes, e-way bills) accompanied the goods, and discrepancies were inadvertent errors without tax evasion intent. Reliance was placed on earlier decisions predating April 2018, which allowed some leniency due to difficulties in generating e-way bills. The Court distinguished these precedents, emphasizing that post-April 2018, the statutory scheme mandates strict compliance. The petitioner's explanation that the vehicle was parked at the godown for unloading was rejected as an afterthought, given the interception location was away from the godown. The Court held that production of documents after interception cannot negate the penalty liability, as the statutory purpose of deterrence requires compliance at the time of transit. The petitioner failed to provide sufficient evidence to rebut the presumption of evasion. Issue (d): Applicability of precedents prior to and post April 2018 The petitioner relied on several judgments decided before April 2018, which recognized difficulties in generating e-way bills and were more lenient regarding penalties for non-compliance. The Court clarified that these precedents are distinguishable because the 14th Amendment to the Rules, effective 01.04.2018, resolved those difficulties and made e-way bill compliance mandatory without exception. The Court relied on recent decisions of coordinate Benches which reaffirmed this position and upheld penalties for non-compliance post-April 2018. 3. SIGNIFICANT HOLDINGS The Court's crucial legal reasoning includes the following verbatim excerpts: "This Court in umpteen cases where penalties were being imposed under Section 129 of the Act though held that an intention to evade tax should be present, however, in the event the goods are not accompanied by the invoice or the e-way bill, a presumption may be raised that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods." "Mere furnishing of the documents subsequent to the interception can not be a valid ground to show that there was no intention to evade tax. There must be some reasonable grounds to justify the non-production of documents at the proper time." "The judgments upon which the petitioner is relying are prior to April 2018, when there were actually some difficulties with the generation of e-way bill. But after April, 2018 those difficulties have been resolved and now there is no difficulty in generating and downloading the e-way bill." "The application of Section 129(3) of the Act by the authorities is valid and just in law." The core principles established are:
The final determination was to dismiss the writ petition, upholding the penalty imposed under Section 129(1) and confirmed under Section 129(3) of the Act of 2017 for non-compliance with mandatory e-way bill provisions.
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