B M Computers Vs Commissioner Commercial Taxes And 2 Others (Allahabad High Court)
Allahabad High Court confirms GST penalty on B M Computers for incomplete and inaccurate e-way bills during stock transfer, citing mandatory compliance.
Prayagraj: The Allahabad High Court has dismissed a petition challenging a GST penalty imposed on B M Computers for irregularities found in e-way bills accompanying a stock transfer consignment. The court upheld the penalty, emphasizing that carrying a complete and accurate e-way bill is mandatory for the movement of goods under the GST regime, especially after the rules were amended in April 2018.
B M Computers, a registered dealer in computer hardware, had transported goods as a stock transfer from its head office in Agra to its Ghaziabad branch. The consignment involved two invoices with declared values including tax, accompanied by e-way bills. The transport was intercepted at a toll plaza in Greater Noida by the State Tax Mobile Squad.
Upon interception, authorities found deficiencies in the e-way bills. For one consignment, only Part A of the e-way bill was filled, while Part B, which contains vehicle details necessary for transportation, was missing at the time of interception and generated later. For the second consignment, the e-way bill erroneously showed the destination as Agra to Agra, despite the goods being transported from Agra to Noida. Based on these findings, a detention order was issued, followed by a show cause notice. The Assistant Commissioner subsequently imposed a penalty under Section 129(3) of the UPGST/CGST Act, 2017. B M Computers paid the penalty to secure the release of the goods and vehicle but challenged the order before the Appellate Authority. The appeal was dismissed, leading the firm to file the present writ petition before the High Court.
B M Computers argued that the appellate order was non-speaking and that the absence of a complete e-way bill was merely a human error on the part of the transporter, as the goods were duly covered by tax invoices. The petitioner cited several previous High Court judgments, including M/s. Varun Beverages Limited vs. State of U.P., M/s. Falguni Steels vs. State of U.P., Indeutsch Industries Pvt. Ltd. vs. State of U.P. & others, M/s. Exch. Therm Engineering Company vs. State of U.P. and others, and M/s Rawal Wasia Yarn Dying Pvt. Ltd. vs. Commissioner Commercial Tax and another. These cases, according to the petitioner, supported the view that a penalty under Section 129 should not be imposed without establishing an intention to evade tax, and minor discrepancies might not suffice for proving such intent.
The State, represented by the learned Standing Counsel, opposed the petition, arguing that the circumstances clearly indicated an intention to evade tax. The State highlighted that Part B of the e-way bill for one consignment was generated after the interception, and the incorrect destination mentioned in the second e-way bill (Agra to Agra instead of Agra to Noida) was deliberate. It was contended that the deliberate non-filling of Part B prevented the e-way bill’s validity period from commencing, suggesting an intent to potentially use the same documents for transporting goods in multiple vehicles to evade tax. The State emphasized that Rule 138 mandates a complete e-way bill. The State also distinguished the judgments relied upon by the petitioner, arguing they pertained to the period before the 14th Amendment to the UPGST Rules, 2017, effective from April 1, 2018. Post-amendment, carrying a complete e-way bill is mandatory. The State relied on recent coordinate bench decisions in M/s. Jhansi Enterprises vs. State of U.P. and others and M/s. Akhilesh Traders vs. State of U.P. and others.
The High Court, after hearing both sides, focused on whether a complete e-way bill is mandatory post the April 1, 2018 amendment to Rule 138. The court agreed that the legal position changed after this amendment, making a complete e-way bill obligatory. The court referenced and followed the reasoning in Akhilesh Traders, which held that while intention to evade tax is necessary for a Section 129 penalty, the absence of an invoice or e-way bill can raise a rebuttable presumption of such intent. However, Akhilesh Traders also noted that merely producing documents after interception is insufficient to rebut this presumption, as the purpose of the penalty is deterrence.
The court further cited Jhansi Enterprises, which, following Akhilesh Traders, reiterated that post-interception furnishing of documents is not a valid excuse unless reasonable grounds for the initial non-production are shown. Jhansi Enterprises also pointed out that the technical difficulties in generating e-way bills cited in pre-April 2018 cases were no longer relevant after the rule amendment and system improvements.
Applying these principles to the present case, the High Court noted the admitted facts: Part B was missing at interception and generated later for one e-way bill, and the destination was incorrectly stated for the other. The court found that Rule 138 mandates furnishing complete information before the commencement of goods movement. The court concluded that the petitioner’s conduct, including the delayed generation of Part B and the inaccurate destination, clearly indicated an intention to evade tax.
The court distinguished the judgments cited by the petitioner, noting they were based on the legal position and practical difficulties existing prior to the April 2018 amendment to Rule 138. The court held that merely downloading Part A and not filling Part B does not absolve the liability under the Act.
Finding no grounds to interfere with the penalty order and the appellate order confirming it, the High Court dismissed the writ petition.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
