Gurunanak Arecanut Traders Vs Commissioner (Supreme Court of India)
The dispute arose from the detention of 400 bags of Arecanut sold by the petitioner to M/s. Jagdamba Enterprises, Nagpur. The goods, transported from Delhi to Nagpur, were intercepted at Mathura at 4:28 a.m. on 10.06.2022 without an accompanying e-way bill. The e-way bill was generated later the same day at 7:36 a.m. During physical verification, the goods were found to be Chikni Bhuni Supari (processed Arecanut), which the authorities treated as taxable at 18%, whereas the goods had been declared at 5%. A detention order under Section 129(1) of the State Goods and Service Tax Act, 2017 and a subsequent order under Section 129(3) resulted in a tax and penalty demand of Rs.90,62,400/-. The petitioner’s statutory appeal was rejected on 18.08.2022.
Before the Allahabad High Court, the petitioner contended, among other things, that the detention and penalty orders had been passed without an opportunity of hearing; that the e-way bill was generated promptly after the driver realised it was unavailable; and that alleged misclassification could not constitute a basis for detention of goods in transit. Reliance was placed on M/s. Modern Traders vs. State of U.P. and 2 others, 2018 NTN 187, Axpress Logistics India Pvt. Ltd. vs. Union of India and 3 others, 2018 NTN 245, Raj Iron and Building Materials vs. Union of India, 2018 UPTC 217, M/s. Falguni Steels vs. State of U.P. and others, 2024 UPTC 221 and Asharaf Ali K.H. vs. The Assistant State Tax Officer & others, 2021 UPTC 469.
The Standing Counsel opposed the petition, relying on the absence of an e-way bill at interception, the subsequent generation of the e-way bill, discrepancies concerning the petitioner’s business particulars and the nature and classification of the goods. It was also submitted that the relevant statutory provisions required an e-way bill to accompany goods in transit after April 2018.
The High Court identified the central question as whether carrying an e-way bill was mandatory for movement of goods. Referring to the 14th Amendment of the Uttar Pradesh Goods and Service Tax Rules, 2017, effective from 01.04.2018, the Court held that goods were required to be accompanied by an e-way bill. Relying upon Akhilesh Traders and Jhansi Enterprises, the Court noted that absence of the e-way bill could give rise to a rebuttable presumption of intention to evade tax and that subsequent production of the documents would not, by itself, rebut that presumption.
On the facts before it, the High Court noted that the goods were intercepted at 4:28 a.m., whereas the e-way bill was generated at 7:36 a.m. It also considered the material concerning the petitioner’s place of business and the difference between the goods declared and those physically verified. The Court rejected the contention regarding non-service of notice, observing that notice had been served upon the driver and sent by e-mail to the seller and buyer but remained unattended. It further held that the circumstances revealed an intention to evade tax and that subsequent downloading of the e-way bill did not absolve liability under the Act. The writ petition was dismissed.
Supreme Court Decision
The Supreme Court did not interfere with the impugned order/judgment under Article 136. It therefore dismissed the Special Leave Petition after condoning the delay. The supplied Supreme Court order does not record a separate examination or determination of the underlying questions concerning the e-way bill, classification of the goods, Section 129 proceedings, tax rate or alleged intention to evade tax. Accordingly, the Supreme Court’s disposition is confined to declining interference with the impugned judgment; the supplied material does not support attributing the Allahabad High Court’s reasoning on those issues to the Supreme Court as an independently recorded holding.
The effect of the Supreme Court order, on the supplied material, is that the challenge to the Allahabad High Court judgment did not result in interference under Article 136. The High Court’s dismissal therefore remained undisturbed.
Cases Discussed
- M/s. Modern Traders vs. State of U.P. and 2 others, 2018 NTN 187
- Axpress Logistics India Pvt. Ltd. vs. Union of India and 3 others, 2018 NTN 245
- Raj Iron and Building Materials vs. Union of India, 2018 UPTC 217
- Asharaf Ali K.H. vs. The Assistant State Tax Officer & others, 2021 UPTC 469
- M/s. Falguni Steels vs. State of U.P. and others, 2024 UPTC 221
- M/s. Akhilesh Traders vs. State of U.P. and others, Writ Tax No. 1109 of 2019, decided on 20.02.2024
- M/s. Jhansi Enterprises, Nandanpura, Jhansi vs. State of U.P. and others, Writ Tax No. 1081 of 2019, decided on 01.03.2024
Read HC Judgment in this case: Gurunanak Arecanut Traders Vs Commercial Tax And Another (Allahabad High Court)
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
Delay condoned.
We do not find a good ground to interfere with the impugned order/judgment in exercise of our jurisdiction under Article 136 of the Constitution of India. Accordingly, the special leave petition stands dismissed.
Pending application(s), if any, shall stand disposed of.
