Goods Not Accompanied By E-Way Bill, Without Matching Description Shows Intention To Evade Tax: Allahabad High Court

The Allahabad High Court has held that the intention to evade tax is established by the fact that the goods in transit were not accompanied by e-way bill and the goods taxable at 18% were taxed only at 5%. The Court held that after 2018, it was mandatory for the assesee to download e-way bill with goods in transit. “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.” Petitioner sold 400 bags of Arecanuts which were being transported from Delhi to Nagpur when they were intercepted in Mathura around 4:28am. The goods were not accompanied by with e-way bill and the same was generated after interception at 7:36am. Upon physical verification of the goods, it was found that they were taxable at 18% but were taxed by the petitioner at 5%. A show cause notice was issued to the petitioner and subsequently, order under Section 129(3) of the GST Act was passed imposing tax demand and penalty on the petitioner. Appeal filed by the petitioner was rejected. Accordingly, the petitioner approached the High Court. Counsel for petitioner argued that the appellate authority had failed to consider that no opportunity of hearing was granted to the assesee before passing the penalty order. It was argued that the person responsible for downloading e-way bills was not present and the driver of the truck left with the goods without informing the petitioner. Counsel submitted that as soon as the mistake was realized, the e-way bill was produced before the authorities. Per contra, standing counsel argued that upon inquiry, place of business of the petitioner firm was not found and therefore, suo moto cancellation had been initiated against the firm. It was submitted that there was mismatch between unidentified goods owner in the name of present seller. This coupled with other facts indicated intention to evade tax, argued the Department. The Court took note of the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017 which made in mandatory for the goods in transit to be accompanied with e-way bill w.e.f. 01.04.2018. The Court relied on M/s. Akhilesh Traders vs. State of U.P. and others and M/s. Jhansi Enterprises, Nandanpura, Jhansi vs. State of U.P. and others where the Allahabad High Court had held that intention to evade tax is established if the goods in transit are not accompanied by e-way bill and the e-way produced subsequent to interception will not absolve the assesee of his liabilities to pay tax and penalty. Observing that the notice was served both on the driver and the petitioner but remained unreplied, Justice Rohit Ranjan Agarwal held “Moreover, 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%.” Accordingly, the writ petition was dismissed. Case Title:- M/S Gurunanak Arecanut Traders v. Commercial Tax And Another 2025 LiveLaw (AB) 79 [WRIT TAX No. - 1177 of 2022]Case citation: 2025 LiveLaw (AB) 79 Click Here To Read/Download The Order

Goods Not Accompanied By E-Way Bill, Without Matching Description Shows Intention To Evade Tax: Allahabad High Court

Upasna Agrawal

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