Case Law Details
Usha Wire Netting Vs State of UP and others (Allahabad High Court)
In the case of Usha Wire Netting Vs State of UP and others, the Allahabad High Court issued a judgment that reinforces the strict requirement for compliance with documentation rules under the Goods and Services Tax (GST) Act, particularly concerning the transportation of goods for ‘job work.’ The court dismissed the writ petition filed by Usha Wire Netting, a proprietorship firm, finding no grounds for interference with the proceedings initiated by the state authorities. The ruling stands as a significant judicial precedent, clarifying that the absence of proper documentation at the time of interception, as mandated by the GST Rules, justifies the initiation of tax proceedings, regardless of a taxpayer’s claimed intent.
The case originated from a routine business operation. Usha Wire Netting, a manufacturer of various wire products, purchased goods from M/s Shakumbhari Ispat & Power Ltd. in West Bengal for transportation to Ghaziabad, Uttar Pradesh. The goods were being carried in Vehicle No. RJ02 GB5224. According to the petitioner, the driver was instructed to transport the goods to M/s Usha International, located just one kilometer from the petitioner’s firm, for a ‘job work.’ A delivery challan and e-way bill were reportedly generated for this purpose. However, on April 18, 2019, the vehicle was intercepted by state authorities. During the interception, the driver produced documents for the goods but could not immediately provide the specific documentation related to the ‘job work.’ The petitioner contended that the necessary documents—the delivery challan and e-way bill for the job work—were generated and produced prior to the issuance of a seizure order, thereby demonstrating a clear absence of any intent to evade tax. Despite this, the authorities initiated proceedings under Section 129(3) of the GST Act, leading to a seizure order. The petitioner’s subsequent appeal was also dismissed, prompting the firm to file a writ petition before the High Court.
The petitioner’s central argument was that the proceedings were unwarranted because the requisite documents were produced before the seizure order was finalized. This, they claimed, proved that there was no dishonest intention to avoid tax payments. The petitioner’s counsel urged the court to consider the context of the situation, specifically that the documents were a clerical matter and were rectified swiftly.
In opposition, the learned Additional Chief Standing Counsel (ACSC) for the state respondents defended the impugned orders, arguing that the proceedings were entirely justified. The ACSC maintained that at the crucial moment of interception, the goods were not accompanied by the genuine and proper documents required for ‘job work.’ The state’s counsel emphasized that even if the goods were genuinely intended for job work, specific documentation, as mandated by Rule 45 and Rule 55 of the GST Rules, must accompany the consignment. The failure to do so constituted a clear contravention of the law, justifying the actions taken by the authorities.
The court meticulously reviewed the arguments and the provided records. It was an undisputed fact that the goods were transported from West Bengal to Uttar Pradesh. The court acknowledged the petitioner’s claim that an e-way bill was produced before the seizure order. However, it placed paramount importance on the fact that at the time of interception, no proper or requisite documents related to the goods being sent for ‘job work’ were produced. The court’s reasoning was heavily influenced by its prior rulings in similar cases, citing two significant judicial precedents.
The first precedent cited was Nippon Tubes Limited Vs. State of UP and others. In this case, the court had similarly found that no relevant documents, such as a delivery challan required under Rules 45 and 55 of the GST Rules, were prepared for the goods sent for job work. Critically, no e-way bill was produced at any stage. The court in Nippon Tubes Limited held that in the absence of these specified documents, the goods could not be considered to be legitimately accompanied by the required paperwork.
The second precedent, M/s Famus India Vs. State of UP and others, further solidified the court’s position. In M/s Famus India, goods were found at a destination different from the one mentioned in the accompanying documents. The petitioner claimed the goods were for ‘job work,’ for which a challan had been issued. However, the court again sided with the state, which argued that the failure to issue a challan as required under GST Rules 45 and 55 constituted a violation. The court in M/s Famus India quoted Rule 45 and Rule 55 of the GST Rules in their entirety, highlighting the specific conditions and restrictions for goods sent to a job worker.
Rule 45 stipulates that inputs or capital goods sent to a job worker must be covered by a challan issued by the principal. This challan must contain the details specified in Rule 55. Rule 55 explicitly governs the transportation of goods without a tax invoice, such as for ‘job work,’ and details the mandatory information that a delivery challan must contain, including the date, challan number, details of the consigner and consignee, description and quantity of goods, and the place of supply. The court in M/s Famus India underscored that a challan must be prepared in triplicate and duly filled in the prescribed format.
Based on these well-established judicial precedents and the specific provisions of the GST Rules, the Allahabad High Court concluded that there was a clear non-compliance with the legal requirements. The court stated that once there was “neither any delivery challan as required under Rule 45 read with Rule 55 of the GST Rules nor any e-way bill was accompanying with in respect of the goods sent for job worker,” the proceedings initiated by the authorities could not be deemed illegal or arbitrary. The court explicitly stated that the issue in the present case was “squarely covered” by the decision in Nippon Tubes Limited.
In light of the facts and the consistent legal interpretation provided by its precedents, the Allahabad High Court found no reason to interfere with the impugned orders. Consequently, the court held that the writ petition lacked merit and dismissed it accordingly, confirming that the procedural requirements of the GST Act are not merely suggestions but mandatory obligations that must be met at the time of the event, in this case, the interception of the goods in transit.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard learned counsel for the petitioner and learned ACSC for the State respondents.
2. By means of present petition, the petitioner is assailing the order dated 31.1.2021 passed by respondent no. 2.
3. Learned counsel for the petitioner submits that the petitioner is a proprietorship firm and engaged in the business of manufacturing of all kinds of wire netting (fencing), barbed, wires, nails & welded wire mesh. He submits that in the normal course of business, the petitioner purchased the goods from M/s Shakumbhari Ispat & Power Ltd, West Bengal for its transportation to Ghaziabad, UP. He submits that the goods in question were loaded in Vehicle No. RJ02 GB5224 and at the time of movement of the goods, the driver of the vehicle has been instructed to take the vehicle at the place of job work i.e. M/s Usha International, which was at a distance of only 1 km from the place of petitioner’s firm. Thereafter, delivery challan and e-way bill was also generated. He submits that the goods were intercepted on 18.4.2019 and the driver of the vehicle produced the document accompanying the goods but no document with regard to job work has been handed over and the same was generated and produced prior to seizure order could be passed. He submits that there was no intention to avoid the payment of tax as the delivery challan and e-way bill was produced prior to seizure order but being not satisfied with the same, the proceedings under Section 129 (3) has been initiated in which the impugned order has been passed against which an appeal has been filed which has also been dismissed.
4. He submits that there was no intent of the petitioner to evade the payment of tax. He submits that before the seizure order could be passed, the e-way bill and tax invoice were prepared and same were produced but the same has not been considered. He prays for allowing the writ petition.
5. Per contra, learned ACSC supports the impugned order and submits that goods in question were not accompanying with proper/ genuine documents at the time of interception, therefore, the proceedings are justified. He submits that even assuming without admitting the same that the goods were sent for job work, requisite / specific documents must be accompanied with the goods in compliance of the provisions of Rule 45 read with Rule 55 of GST Rules.
6. In support of his submission, learned ACSC has relied upon the judgment of this Court in the case of M/s Famus India Vs. State of UP and others (Neutral Citation No. 2025:AHC:34283), Nippon Tubes Limited Vs. State of UP and others (Neutral Citation No. 2025:AHC:164090).
7. After hearing learned counsel for the parties, the Court has perused the records.
8. It is not in dispute that goods were moved from West Bengal to UP and at the time of interception, no proper/ requisite documents were produced in respect of the goods sent for job work but no documentary evidence was adduced, however, before the seizure order, the e-way bill was produced.
9. This Court in the case of Nippon Tubes Limited (supra) has held as under:
10. The record shows that in respect of the goods sent for job worker, no relevant document i.e. delivery challan was prepared as required under Rule 45 and 55 of GST Rules and further no e-way bill was produced at any stage. Therefore, in the absence of said document, the goods in question cannot be said to be accompanying with specified documents.
11. This Court in the case of M/s Famus India (supra) has held as under:
“9. Admittedly, the goods in question were transported from Ghaziabad to Meerut on 28.6.2019 and at the time of interception, the goods in question were found at different destination from the destination mentioned in the accompanying documents. After physical verification as well as detention of goods, a stand has been taken by the petitioner that the goods were sent for job work, a challan has been issued as such there is no contravention of the provisions of the Act. However, learned ACSC has submitted that there are contravention of the provisions prescribed under Rule 45 and 55 of the GST Rules as goods send for job work a challan is required to be issued and in the absence thereof, the proceedings are justified.
10. Before proceeding further, it is pertinent to quote here the relevant Rules of GST Rules:-
Rule 45: Conditions and restrictions in respect of inputs and capital goods sent to the job worker
(1) The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker 1[, and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker:
Provided that the challan issued by the principal may be endorsed by the job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal:
Provided further that the challan endorsed by the job worker may be further endorsed by another job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.]
(2) The challan issued by the principal to the job worker shall contain the details specified in rule 55.
(3) The details of challans in respect of goods dispatched to a job worker or received from a job worker 2[******] 3[during a specified period] shall be included in FORM GST ITC-04 furnished for that period on or before the twenty-fifth day of the month succeeding 4[the said period] 5[or within such further period as may be extended by the Commissioner by a notification in this behalf:
Provided that any extension of the time limit notified by the Commissioner of State tax or the Commissioner of Union territory tax shall be deemed to benotified by the Commissioner.]
(4) Where the inputs or capital goods are not returned to the principal within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job worker on the day when the said inputs or capital goods were sent out and the said supply shall be declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.
Rule 55. Transportation of goods without issue of invoice.-
(1) For the purposes of-
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the supplier is not known,
(b) transportation of goods for job work,
(c) transportation of goods for reasons other than by way of supply, or
(d) such other supplies as may be notified by the Board, the consigner may issue a delivery challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of invoice at the time of removal of goods for transportation, containing the following details, namely:-
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number or Unique Identity Number of the consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known );
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess , where the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature
(2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following manner, namely:-
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.
(3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be declared as specified in rule 138.
(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice could not be issued at the time of removal of goods for the purpose of supply, the supplier shall issue a tax invoice after delivery of goods.
(5) Where the goods are being transported in a semi knocked down or completely knocked down condition 1[or in batches or lots] –
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving reference of the invoice;
(c) each consignment shall be accompanied by copies of the corresponding delivery challan along with a duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment.
11. On bare reading of the aforesaid rules, it appears that there is requirement for issuing a challan for the goods send to job work. Rule 55 provides that challan should be issued or in duplicate and duly filled in prescribed format.”
12. Once there was neither any delivery challan as required under Rule 45 read with Rule 55 of the GST Rules nor any e-way bill was accompanying with in respect of the goods sent for job worker, the proceedings initiated against the petitioner by the respondent authorities , cannot be said to be illegal or arbitrary in manner.
13. In view of above, no interference is called for by this Court in the impugned order.
14. The writ petition lacks merit and is dismissed
11. The issue involved in the present case is squarely covered with the decision of this Court in the case of Nippon Tubes Limited (supra).
12. In view of the facts and circumstances of the case as well as law laid down by this Court as referred herein above, no interference is called for by this Court in the impugned orders.
13. The writ petition lacks merit and same is dismissed accordingly.
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