2025 (3) TMI 419 - HC - GST

Challenge to detention and penalty order - whether carrying e-way bill is mandatory for the movement of goods from one place to another? - 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 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 by respondent no. 2 on 10.06.2022 at 4 28 a.m. while the eway bill was generated on the same day at 7 36 a.m. 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 conduct of the petitioner clearly reveals that an intention to evade the tax is 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 on 10.06.2022. Goods declared were taxable @5% while the goods found on verification were taxable @18%. Conclusion - The e-way bill was generated after the goods were intercepted leading the court to conclude that there was an intention to evade tax. No case for interference is made out - petition dismissed.

Summary

The legal judgment issued by the Allahabad High Court addressed several key issues related to a writ petition challenging orders passed under the State Goods and Service Tax Act, 2017. The main issues presented and considered in the judgment are as follows:1. Whether the detention order and penalty order were passed without providing an opportunity of hearing.2. Whether the misclassification of goods can be the basis for detaining goods in transit.3. Whether the requirement of carrying an e-way bill is mandatory for the movement of goods.4. Whether there was an intention to evade tax in the case at hand.The court conducted a detailed analysis of each issue, considering the relevant legal framework, precedents, evidence, and arguments presented by both parties. The court's interpretation and reasoning, key findings, application of law to facts, treatment of competing arguments, and final determinations on each issue are summarized below:The court noted that the detention order and penalty order were issued without providing an opportunity of hearing. The petitioner argued that the orders were passed hastily without considering all relevant factors. However, the court found that the petitioner failed to participate in the proceedings before the authorities, and notice was duly served on the driver and sent via email to both the seller and buyer. As a result, the court concluded that there was no basis for interference in this regard.Regarding the misclassification of goods, the petitioner contended that goods were wrongly classified as Chikni Bhuni Supari instead of Arecanut, and this should not be the basis for detaining the goods. However, the court found that the description of goods declared by the petitioner differed from the goods found on verification, which were taxable at a higher rate. Therefore, the court held that the misclassification of goods indicated an intention to evade tax.The court also addressed the issue of whether carrying an e-way bill is mandatory for the movement of goods. The court cited the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017, which made it obligatory for goods to be accompanied by an e-way bill. The court referred to precedents that established a presumption of tax evasion when goods are not accompanied by the required documentation. In this case, the e-way bill was generated after the goods were intercepted, leading the court to conclude that there was an intention to evade tax.In conclusion, the court dismissed the writ petition, finding that the petitioner had not complied with the provisions of the law. The court held that the actions taken by the taxing authorities were proper and in accordance with the law, and no interference was warranted. The court emphasized the importance of adhering to the legal requirements, including the mandatory use of e-way bills, to prevent tax evasion.Overall, the judgment highlights the significance of compliance with tax laws and regulations, particularly regarding the proper documentation and classification of goods during transit to prevent tax evasion.