M/S Jai Enterprises vs. Pankaj Gandhi, Additional Commissioner Gr-2 Appeal Iv, State Tax Kanpur & Ors.

Facts

M/s Jai Enterprises transported goods from Kanpur to Fatehpur under specific invoice and E-Way Bill numbers on March 1, 2022. The vehicle was checked twice by the Mobile Squad in Kanpur on the same day. The department inferred reuse of E-Way Bills to evade tax, leading to the detention of goods and imposition of penalty. The appellant explained the delay by stating the vehicle had broken down and produced a repair bill and driver's affidavit. The goods matched the documentation, and the E-Way Bills were valid at the time of detention. The First Appellate Authority upheld the department's view. The appellant appealed this decision to the Goods and Services Tax Appellate Tribunal, Lucknow Bench, challenging the detention order and the appellate order.

Held

The Tribunal held that the department failed to establish by cogent and independent material that the goods had already completed an earlier journey or that the E-Way Bills had been reused. The mere earlier verification or scanning of an E-Way Bill does not, by itself, constitute proof of reuse or re-transportation. No discrepancy was established in the description, quantity, value, or ownership of the goods. The Tribunal found the First Appellate Authority's conclusion that an intention to evade tax is automatically proved to be legally unsustainable, emphasizing that intention cannot be presumed from suspicion and requires proof of the underlying contravention. Furthermore, the department failed to establish that the vehicle-repair bill was false or forged. Consequently, the original order under Section 129 and the appellate order were set aside. The amount of Rs. 6,06,844/- deposited by the appellant was directed to be refunded. The ratio decidendi is that detention and penalty proceedings under Section 129 cannot be sustained on mere suspicion or presumption; the department must provide concrete evidence of contravention and intent to evade tax.

Key Issues

1. Whether the department established that the goods were being re-transported or the E-Way Bills were reused, thereby contravening Section 129 of the CGST/UPGST Act, 2017? - Petitioner's argument: The department failed to provide independent and cogent evidence to prove that the goods had already completed an earlier journey or that the E-Way Bills were reused. The mere earlier verification/location of the E-Way Bill is insufficient proof. - Revenue's argument: The judgment does not explicitly record arguments from the revenue on this specific issue, but their actions imply they believed the earlier scanning of the E-Way Bill constituted proof of reuse. 2. Whether the earlier verification/scanning of the E-Way Bills automatically established an intention to evade tax, as per Section 129 of the CGST/UPGST Act, 2017? - Petitioner's argument: Intention to evade tax cannot be presumed from suspicion or circumstances alone; it requires proof. The First Appellate Authority's conclusion that intention is automatically proved is legally unsustainable. - Revenue's argument: Not explicitly recorded, but their stance suggests they presumed intent from the alleged reuse. 3. Whether the department established that the vehicle-repair bill relied upon by the appellant was false or forged, as relevant to the detention proceedings under Section 129 of the CGST/UPGST Act, 2017? - Petitioner's argument: The department failed to prove the vehicle-repair bill was false or forged. - Revenue's argument: Not explicitly recorded, but their challenge to the appellant's explanation implies they disputed the validity of the repair bill.