Metropolis Logistics Pvt. Ltd. Vs Additional Commissioner and 2 Others (Allahabad High Court)
Summary: The Allahabad High Court, in M/s Metropolis Logistics Pvt. Ltd. v. Additional Commissioner and 2 Others, held that the expiry of an e-way bill caused by an incorrect auto-generated distance, without any intention to evade tax, could not justify seizure of goods and imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act. The petitioner, a GST-registered logistics company, was transporting a motor vehicle chassis from Ashok Leyland Limited in Udham Singh Nagar to M/s Pawansut Automobile India Pvt. Ltd. at Ghazipur, Uttar Pradesh. The consignment was accompanied by a tax invoice, e-way bill, trade certificate and temporary registration documents.
The dispute arose because the e-way bill generated on 10 August 2018 reflected a distance of only 170 kilometres, although the actual distance between the dispatch and delivery locations was approximately 800 kilometres. Consequently, the validity of the e-way bill was automatically fixed up to 12 August 2018. During transportation, the authorities intercepted the chassis and initiated seizure proceedings solely because the e-way bill had expired. No discrepancy was identified in the description, identity or supporting documents of the goods. Nevertheless, the authorities imposed a penalty of ₹30,63,680 under Section 129(3) of the GST law, which was subsequently upheld in appeal by the order dated 26 November 2019.
The petitioner argued that the distance and validity fields were automatically populated by the e-way bill system and could not be amended after generation. It submitted that the mistake was beyond its control and that the tax invoice, trade certificate, temporary registration and destination details clearly established the genuine movement of goods. The petitioner also generated a fresh e-way bill before the penalty order was passed. The Revenue contended that the transporter was responsible for verifying the particulars before commencing the journey and should have cancelled the defective e-way bill and generated another one.
The High Court noted that the consignment consisted of a motor vehicle chassis, which could not be sold without registration with the Motor Vehicle Department. The Court also recorded that the Department did not dispute the automatic generation of the relevant particulars or the inability of the petitioner to amend them. The error was therefore treated as a technical glitch rather than an indication of tax evasion. Since the movement of the chassis was traceable through the GST portal and the supporting documents were otherwise proper, the Court found no basis for attributing an intention to evade tax to the petitioner.
Relying upon the principles recognised in Assistant Commissioner (ST) v. Satyam Shivam Papers Private Limited, Ashoka P.U. Foam (India) Private Limited v. State of U.P., Riadi Steels LLP v. State of U.P., Sun Flag Iron & Steel Co. Limited v. State of U.P., Falguni Steels v. State of U.P. and Globe Panel Industries India Private Limited v. State of U.P., the Court reiterated that expiry of an e-way bill cannot automatically be equated with an intention to evade tax. It held that the seizure proceedings should not have been initiated and that the impugned order could not be sustained. Accordingly, the writ petition was allowed and the penalty and seizure order was quashed.
List of Cases Discussed:
1. Assistant Commissioner (ST) Vs Satyam Shivam Papers Private Limited, 2022 (57) GSTL 97 (Supreme Court) — Relied upon concerning detention and penalty arising from expiry of an e-way bill and the absence of tax-evasion intent.
2. Ashoka P.U. Foam (India) Private Limited Vs State of U.P., 2024 (15) Centax 212 (Allahabad High Court) — Relied upon regarding GST detention and penalty in e-way bill disputes.
3. Riadi Steels LLP Vs State of U.P., (2024) 16 Centax 138 (Allahabad High Court) — Relied upon concerning the legal consequences of e-way bill irregularities during transportation.
4. Sun Flag Iron & Steel Co. Limited Vs State of U.P., (2023) 12 Centax 264 (Allahabad High Court) — Relied upon regarding the relationship between e-way bill expiry and alleged tax evasion.
5. Falguni Steels Vs State of U.P., (2024) 15 Centax 67 (Allahabad High Court) — Relied upon in support of the petitioner’s challenge to seizure and penalty proceedings.
6. Globe Panel Industries India Private Limited Vs State of U.P., (2024) 15 Centax 223 (Allahabad High Court) — Relied upon regarding the treatment of e-way bill irregularities and GST penalty proceedings.
FULL TEXT OF THE JUDGMENT/ORDER
1. By means of the present writ petition, the petitioner has assailed the order dated 26.11.2019 passed by respondent no. 1, rejecting the appeal of the appellant filed under Section 129(3) of the U.P. GST Act, confirming the penalty and seizure of the goods.
2. Learned counsel for the petitioner submits that the petitioner is a company registered under the Companies Act, engaged in the business of logistics and duly registered with GST and having GSTIN. In the normal course of business, the petitioner was required to pick up chassis from Ashok Leyland Limited, District Udham Singh Nagar, to be delivered at Ghazipur, U.P., to M/s Pawansut Automobile India Pvt. Ltd., Ghazipur, U.P. The consignment was duly covered with tax invoice and e-way bill. The chassis was duly registered having No.UK060349.
3. Rule 43 of the Central Motor Vehicle Rules, 1989 and consequently, trade certificate for the chassis in question was also issued and duly accompanied the chassis along with other documents.
4. He further submits that while generating the e-way bill, Part-B of the e-way bill is required to be filled up by the assessee. As Part-B is filled, e-way bill number, date of e-way bill generation, validity of e-way bill and approximate distance are auto-uploaded at the top of Part-A. In the said auto-populated description, no amendment can be made.
5. The petitioner, on the basis of filling Part-A, proceeded to deliver the chassis to its destination. He submits that the destination from Udham Singh Nagar to Ghazipur is approximately 800 kilometres, but the auto-generated Part-B wrongly mentioned the distance of 170 kilometres, therefore the validity was given up to 12.08.2018 i.e. for two days. While the goods were in transit, the same were intercepted and seized on the ground that the e-way bill had expired.
6. No discrepancy whatsoever was found except the expiry of the e-way bill and on the said premise, proceedings were initiated and order was passed under Section 129(3) seizing the goods and for the release of the same, penalty was imposed of Rs.30,63,680/-, against which an appeal was filed which has been dismissed without considering the material on record.
7. Learned counsel for the petitioner submits that the proceedings initiated against the petitioner are per se illegal and there was no intent to avoid payment of tax for which proceedings under Section 129(3) have been initiated. He submits that the distance was wrongly mentioned as 170 kilometres while generating the e-way bill on 10.08.2018, for which the validity was mentioned only up to 12.08.2018, whereas the distance was more than 800 kilometres. He further submits that the authorities have not pointed out any other defect other than the one mentioned above.
8. In support of his submission, he relies upon the judgment of the Apex Court as well as this Court in (1) Assistant Commissioner (ST) Vs. Satyam Shivam Papers Private Limited [2022 (57) GSTL 97 (SC)], (2) Ashoka P.U. Foam (India) Private Limited Vs. State of U.P. [2024 (15) Centax 212 (All.)], (3) Riadi Steels LLP Vs. State of U.P. [(2024) 16 Centax 138 (All.)], (4) Sun Flag Iron & Steel Co. Limited Vs. State of U.P. [(2023) 12 Centax 264 (All.)], (5) Falguni Steels Vs. State of U.P. [(2024) 15 Centax 67 (All.)] and (6) Globe Panel Industries India Private Limited Vs. State of U.P. [(2024) 15 Centax 223 (All.)].
9. Per contra, learned Standing Counsel supports the impugned order and submits that the goods in question were intercepted and expired e-way bill was found. It is the duty of the petitioner, before starting the journey, to check the correctness of forms, and if the e-way bill was wrongly mentioning the distance, he ought to have cancelled the same and generated a new e-way bill.
10. After hearing the parties, the Court has perused the record.
11. It is not in dispute that the goods in question are motor vehicle chassis which were duly accompanied with tax invoice, e-way bill, sale certificate and temporary registration as per Rule 43 of the Central Motor Vehicle Rules, 1989. It is a matter of common knowledge that motor vehicles cannot be sold except after getting due registration with the Motor Vehicle Department. The goods in question are not edibles or electronic commodities which can be purchased and sold without being separately registered.
12. Further, the e-way bill was generated on 10.08.2018, where the distance has been shown as 170 kilometres, therefore the validity was available up to 12.08.2018. Further, the place of delivery has specifically been shown as Ghazipur, Uttar Pradesh, for which tax invoice and trade certificate for the chassis were issued and the chassis was temporarily registered.
13. Once these facts were within the knowledge of the seizing authority, the seizure proceedings ought not to have been initiated. Further, the argument raised by the petitioner’s counsel that after filling Part-A, the above columns are auto-uploaded and duly filled accordingly has not been disputed by the learned Additional Chief Standing Counsel. The learned Additional Chief Standing Counsel also admits that the above columns cannot be amended by the assessee.
14. It is also not the case that after generation of the above e-way bill, a copy of which has been annexed as Annexure-2 at page 20 of the petition, the same could have been cancelled within 24 hours as permissible under the Act. The case in hand, at best, can be said that the e-way bill had expired due to technical glitch which was beyond the control of the petitioner.
15. It is also not in dispute that the petitioner had generated a new e-way bill before passing of the order under Section 129(3) of the GST Act. Under the GST regime, all documents are available on the GST portal. The department is very well aware of the movement of goods from Udham Singh Nagar onwards to Ghazipur, Uttar Pradesh. Therefore, there cannot be any intention attributed to the petitioner for avoiding payment of tax.
16. This Court on various occasions has taken the view that expiry of e-way bill cannot be attributed to evasion of tax. Various references have been made in the judgments mentioned hereinabove.
17. This Court finds the case in hand squarely covered by the judgments referred to hereinabove.
18. In view of the above facts and circumstances of the case and the law laid down by this Court, the impugned order cannot be sustained and is, hereby, quashed.
19. The writ petition is accordingly allowed.
