PRODUCING E-WAY BILL BEFORE ISSUE OF SEIZURE ORDER

[Mr. M. GOVINDARAJAN]

In ‘M/S BANS STEEL THROUGH ITS PROPRIETOR ALPANA JAIN VERSUS STATE OF U.P. AND 2 OTHERS - 2024 (8) TMI 772 - ALLAHABAD HIGH COURT, the petitioner is the wholesale and retail distributor of iron and steel.  The petitioner registered with the GST Department.  The petitioner purchased goods from NBM Traders on 08.07.2019. The seller issued tax invoices and generated E-way bill.  After purchase the petitioner sold the goods to Dinesh Chandra Gupta vide invoice No. 21, dated 12.07.2019 and to Jain S.S. Steels vide invoice No.22, dated 12.07.2019.

On the same date the petitioner generated E-Way Bill for the bill No. 21 and could not generate E-way Bill for the bill no. 22 due to technical glitches but issued the same on 14.07.2019.  During the transit of the above goods the vehicles was intercepted on 13.07.2019.  The GST Authorities issued GST MOV – 01 on 13.07.2019.  After the issuing of GST MOV – 04 and GST MOV – 06, the Authorities detained the goods on the ground that there was no E-Way bill no. 22.  The petitioner submitted the E-way bill generated on 13.07.2019 to the Department immediately.

On 14.07.2019 the Authorities passed an order imposing tax liability of Rs.381268/- and equal penalty despite the petitioner submitted E-way Bill before passing the order.  The petitioner challenged the said order before the First Appellate Authority who dismissed the appeal filed by the petitioner.

Therefore, the petitioner filed the present writ petition challenging the order of the first appellate Authority before the High Court.  The petitioner submitted the following-

• once after issuance of show cause notice as well as before passing the seizure order, the E-way bill in respect of tax invoice no. 22 dated 12.7.2019 has been submitted before the respondent authorities, the proceeding is not justified in the eyes of law;
• there was no intention of the petitioner to avoid the payment of tax.

Thus, the petitioner prayed the High Court to allow his writ petition by quashing the order of the Adjudicating Authority as confirmed by the First Appellate Authority. 

The Department submitted the following before the High Court-

• there was a violation of the Act as well as the Rules, therefore, the proceedings have rightly been initiated against the petitioner;
• the goods were not accompanying with proper documents as required under the Act;
• E-way bill with regard to tax invoice no. 22 dated 12.7.2019 was not accompanying with the goods at the time of interception, therefore, a presumption has been drawn that the petitioner was trying to avoid the payment of tax in respect of tax invoice no. 22, dated 12.07.2019, which was not rebutted by the petitioner at the time of detention;
• it is nota case that requisite documents were accompanying with the goods but there was some technical error as Part III was not filled or there was some mistake in E-waybill.

The Department relied on the following judgments-

1. Writ Tax No. 1109 of 2019 (M/S AKHILESH TRADERS VERSUS STATE OF U.P. AND 3 OTHERS - 2024 (2) TMI 1128 - ALLAHABAD HIGH COURT) Neutral Citation No. 2024: AHC: 29040;
2. Writ Tax No. 739 of 2020 (M/S HAWKINS COOKERS LIMITED VERSUS STATE OF U.P. AND 2 OTHERS- 2024 (2) TMI 760 - ALLAHABAD HIGH COURT ) Neutral Citation No. 2024: AHC:24164.

The Department, therefore, prayed for the dismissal of the writ petition. 

The High Court heard the submissions of the parties and also perused the records available.  The High Court observed that at the time of interception of the goods, no E-way bill in respect of tax invoice no. 22 dated 12.7.2019 was produced, therefore, the goods were detained, however before the seizure order could be passed and after issuance of show cause notice, the E-way bill in respect of tax invoice no. 22 dated 12.7.2019 was produced, in which no discrepancy was pointed out by any of the respondent authorities. The only ground for detention being taken by the respondent authority is that once the goods in question was not accompanying with proper documents, there was intention to avoid the payment of tax.

The High Court analyzed the judgments relied on by the Department.  The High Court observed that in the case of Akhilesh Traders (supra), neither any tax invoice nor any E-way bill was produced at the time of detention, therefore, the proceedings under Section 129 of the Act was justified by the Court.

In the present case, the High Court observed that two different dealers were loaded in the vehicle and two separate tax invoices i.e. tax invoice no. 21 dated12.7.2019 and tax invoice no. 22 dated 12.7.2019 were generated.  There was no dispute for the bill No. 21.  For the Bill No. 22 no E-way Bill was produced before the Authorities at the time interception of the vehicle.  But the same was produced before the seizure order, dated 14.09.2019 was issued.  No discrepancy was found out by the Authorities in the E-way bill generated for Bill No. 22.  The defect was rectified before the issue of seizure order.  Therefore, the High Court held that judgements relied upon by the Department have no application in the facts and circumstances of the present case, as such, the same are of no aid to the Department.

Since the GST Authorities are having full mechanism and power that after detaining the goods, if the same was not accompanying with the proper documents, the authority could have made survey of the business premises of the petitioner to find out the correctness of transaction but the respondent authorities have chosen in their wisdom not doing so.  The High Court held that no contravention of the provision of the Act have been made by the petitioner, since E-way bill was produced before the seizure order could be passed.

The High Court allowed the petition by quashing impugned order dated 14.7.2019 passed by the Assistant Commissioner, Mobile Squad -11, Kanpur Nagar and the order dated 18.11.2021 passed by Additional Commissioner, SGST Grade -II, Appeal IV, Kanpur Nagar.  The High Court further directed the Department to  refund the deposit, it any, made by the petitioner.