The Allahabad High Court upheld the demand of tax and penalty imposed upon a registered dealer and observed that post amendment in the Uttar Pradesh Goods and Service Tax Rules, 2017, it has become obligatory that goods be accompanied by an e-way bill. Subsequent bill downloading after the goods are put in transit would not absolve the liability under the State Goods and Service Tax Act, 2017.

Through the writ petition, filed before the Allahabad High Court, a challenge was made to an order passed by the Commercial Tax Officer, Sector-3 (Mobile Squad), Etah exercising power under Section 129(1) of the State Goods and Service Tax Act, 2017 and order under Section 129(3). The Petitioner also sought quashing for the demand of tax and penalty of Rs 90,62,400 as well as the appellate order.

The Single Bench of Justice Rohit Ranjan Agarwal held, “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.”

Advocate Pooja Talwar represented the Petitioner while C.S.C. represented the Respondent.

Factual Background

The petitioner, a registered dealer under the State Goods and Service Tax Act, 2017, sold 400 bags of Arecanut vide a tax invoice to another registered dealer M/s. Jagdamba Enterprises. When the Arecanut was being transported from Delhi to Nagpur, the goods were intercepted at Mathura, and it was found that the goods were not carrying the e-way bill. The e-way bill was generated on June 10, 202,2 and was valid till June 16, 2022. After a physical verification of the consignment, a detention order was passed under Section 129(1).

On verification, it was found that the goods which were in transit was Chikni Bhuni Supari (processed Arecanut) and were taxable @ 18% and not @5% as declared by the petitioner. When the show-cause notice remained unattended, an order under Section 129(3) of the Act of 2017 and a demand of tax and penalty of Rs.90,62,400 was raised against the petitioner. The petitioner filed a Petition before the Division Bench of the High Court, which was dismissed on the ground that the petitioner had the remedy of filing an appeal under Section 107. The Petitioner’s appeal under Section 107 of the Act was rejected by the Additional Commissioner, Grade-II (Appeal) vide the order impugned. Hence, the present writ petition was filed.

Issues

One of the main issues before the Bench was whether carrying an e-way bill is mandatory for the movement of goods from one place to another.

Reasoning

The Bench, at the outset, said, “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”

As per the Bench, it was an admitted case that the goods were intercepted on June 10, 2022 while the e-way bill was generated on the same day after about three hours after the detention of the goods. Moreover, on 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 Bench further discarded the argument of the Petitioner that the notice was not served before the order was passed as the material on record revealed that notice was served upon the driver and it was also sent through e-mail to both the seller and buyer, which remained unattended. “Once finding has been recorded by authorities and petitioner firm never participated in the proceedings before the authorities, no case is made out for interference by this Court”, it added.

The Court concluded that there was an intention to evade the tax as not only were the goods in transit not accompanied by an e-way bill, but also, the description of goods declared by the petitioner was different, which was intercepted by the taxing authorities. Goods declared were taxable @5%, while the goods found on verification were taxable @18%.

Thus, highlighting the fact it was mandatory on the part of the seller to download the e-way bill once the goods were put in transit, the Bench dismissed the Petition.

Cause Title: M/S Gurunanak Arecanut Traders v. Commercial Tax And Another (Neutral Citation: 2025:AHC:30988)

Appearance:

Petitioner: Pooja Talwar

Respondent: C.S.C.

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Allahabad High CourtJustice Rohit Ranjan Agarwal

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.