Raju Ujir /R.R. Enterprises Vs. State of U.P. and Others (Allahabad High Court)
Summary: The Allahabad High Court, in Shri Raju Ujir / M/s R.R. Enterprises Vs. State of U.P. and Others, partly allowed a writ petition challenging the imposition of penalty under Section 129(1)(b) of the GST Act for transporting goods without an e-way bill. The Court upheld the legality of the penalty proceedings but directed that the impugned orders be treated as passed under Section 129(1)(a), considering the tax invoice accompanying the goods and the subsequent restoration of the purchasing dealer’s GST registration.
The dispute arose when goods transported from Delhi to Adilabad, Telangana, were intercepted at Agra, Uttar Pradesh. At the time of inspection, no e-way bill was produced. The authorities also found that the purchasing dealer’s GST registration had been suspended with effect from 22 February 2025 following physical verification of the business premises. The Assistant Commissioner, Mobile Squad, Unit-10, Agra, imposed penalty under Section 129(1)(b) by order dated 9 March 2025, which was upheld by the Additional Commissioner Grade-2 (Appeal)-III, State Tax, Agra, on 8 April 2025.
The petitioner argued that the e-way bill could not be generated due to a technical glitch and that the authorities had wrongly invoked Section 129(1)(b). It was submitted that the goods were accompanied by a tax invoice and no discrepancy concerning their description, quality or quantity had been identified. Reliance was placed on Clause 6 of the Circular dated 31 December 2018, under which the consignor or consignee may be treated as the owner where an invoice or other prescribed document accompanies the consignment. The petitioner also relied upon H/S Halder Enterprises, M/s Shahil Traders and M/s Sri Gopikrishna Infrastructure Pvt. Ltd.
The State opposed the petition, emphasising that no e-way bill existed at the time of inspection. It argued that transportation without the mandatory document could enable goods to move without detection and facilitate tax evasion. Reliance was placed on M/s Aysha Builders and Suppliers and M/s Akhilesh Traders to support the detention and penalty proceedings.
The Court found that the goods admittedly moved without an e-way bill. It specifically recorded that paragraph 7 of the writ petition acknowledged that no e-way bill had been generated even after movement commenced and that the requisite documents were produced only after seizure and detention. Applying the decisions in Aysha Builders and Suppliers and Akhilesh Traders, the Court held that the absence of an e-way bill at inspection justified the penalty proceedings and declined to interfere with the penalty on that ground.
However, the Court separately examined whether the penalty should have been imposed under Section 129(1)(a) or Section 129(1)(b). It noted that the tax invoice accompanied the goods and that Clause 6 of the Circular dated 31 December 2018 recognised the consignor or consignee as the deemed owner where the specified documents accompanied the consignment. The purchasing dealer’s registration was valid when transportation commenced, was suspended before the goods reached their destination, and was subsequently restored. The intervening suspension could not justify treating the consignor or consignee as bogus once registration had been restored.
Following H/S Halder Enterprises and M/s Shahil Traders on the applicable provision, the Court held that proceedings ought to have been undertaken under Section 129(1)(a). Accordingly, the writ petition was partly allowed, and the orders dated 9 March 2025 and 8 April 2025 were modified to be treated as passed under Section 129(1)(a), instead of Section 129(1)(b). The judgment thus distinguishes the existence of a penalty liability arising from the absence of an e-way bill from the determination of the appropriate statutory provision where ownership is established through the accompanying tax invoice.
Cases Discussed
- H/S Halder Enterprises Vs. State of U.P. and Others (Allahabad High Court), Writ Tax No. 1297 of 2023 — Relied upon by the petitioner and referred to by the Court in concluding that Section 129(1)(a) was applicable where prescribed documents accompanied the goods.
- M/s Shahil Traders Vs. State of U.P. and Another (Allahabad High Court), Writ Tax No. 178 of 2023 — Relied upon by the petitioner and referred to by the Court in support of proceedings under Section 129(1)(a).
- M/s Sri Gopikrishna Infrastructure Pvt. Ltd. Vs. The State of Tripur and Ors. (Tripura High Court), WP(C) No. 317 of 2020 — Cited by the petitioner; the judgment does not separately analyse its ratio.
- M/s Aysha Builders and Suppliers Vs. State of U.P. and Another (Allahabad High Court), Writ Tax No. 2415 of 2024 — Relied upon by the State and followed by the Court for the proposition that absence of an e-way bill at inspection justified detention and penalty.
- M/s Akhilesh Traders Vs. State of U.P. and 3 Others (Allahabad High Court), Writ Tax No. 1109 of 2019 — Relied upon by the State and followed by the Court regarding the consequences of transporting goods without an e-way bill.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1.Heard Ms. Akashi Agrawal, learned counsel for the petitioner and Sri R.S. Pandey, learned Additional Chief Standing Counsel for the State-respondents.
2.By means of instant writ petition, the petitioner has assailed the order dated 08.04.2025 passed by Additional Commissioner Grade- 2 (Appeal)-III, State Tax, Agra and the order dated 09.03.2025 passed by the Assistant Commissioner, Mobile Squad, Unit-10, Agra, whereby penalty has been imposed under Section 129 (1) (b) upon the petitioner.
3.Learned counsel for the petitioner submits that the goods were in transit from Delhi to Adilabad, Telangana, which were intercepted at Agra, Uttar Pradesh. At the time of inspection, the e-way bill could not be produced and thereafter, it was found that the registration of the purchasing dealer was suspended with effect from 22.02.2025 as during physical verification of the premises, the petitioner was not found in existence, however, no e-way bill was produced before the detention or the seizure order could be passed.
4.She submits that due to technical glitch, the e-way bill could not be generated. She further submits that the authorities were not justified in passing the order under Section 129 (1) (b) of the GST Act instead of Section 129 (1) (a) of the GST Act.
5.In support of her submission, she has placed reliance upon the Clause 6 of the Circular dated 31.12.2018 and submits that if invoice or any other specified document are accompanied with the consignment then either the consignor or the consignee should be deemed to be the owner.
6.She further submits that the case in hand, at the time of inspection and passing of the seizure order, the tax invoice was accompanied with the goods, and no discrepancy with regard to description of quality and quantity mentioned therein has been pointed out.
7.She further submits that once no discrepancy whatsoever has been pointed out in the accompanying tax invoice, the order ought to have been passed under Section 129 (1) (a) instead of under Section 129 (1) (b) of the GST Act.
8.She further submits that the authorities were not justified in rejecting the appeal of the petitioner.
9.In support of her submission, she has placed reliance upon the judgment of the Division Bench of this Court passed in the case of H/S Halder Enterprises Vs. State of U.P. and others (Writ Tax No. 1297 of 2023) and the judgments of this Court passed in the cases of M/s Shahil Traders Vs. State of U.P. and Another (Writ Tax No.178 of 2023) as well as judgment of the High Court of Tripura, Agartala passed in the case of M/s Sri Gopikrishna Infrastructure Pvt. Ltd. Vs. The State of Tripur and Ors. [WP (C) 317 of 2020].
10.Per contra, learned A.C.S.C. supports the impugned orders and submits that at the time of inspection of the goods in transit, no e- way bill was presented, this fact has specifically been mentioned in para no.7 of the present writ petition.
11.He further submits that non-generation of e-way bill could easily be the intention of evasion of legitimate payment of tax as movement of goods will go unnoticed. The petitioner would have succeeded in its attempt if the goods were not inspected and the seizure and penalty order was passed. He prays for dismissal of this writ petition.
12.In support of his submission, he has placed reliance upon the judgment of Division Bench of this Court passed in the case of M/s Aysha Builders and Suppliers Vs. State of U.P. and another (Writ Tax No.2415 of 2024) as well as the judgment of this Court passed by the Single Judge in the case of M/s Akhilesh Traders Vs. State of U.P. and 3 others (Writ Tax No.1109 of 2019). He further submits that the judgment relied upon by the petitioner, counsel for the petitioner are of no aid for quashing the penalty order. At best, instead of releasing the goods as per Section 129 (1) (b) of the GST Act, some relief can be granted under Section 129 (1) (a) of the GST Act, but the penalty and seizure order cannot be said to be illegal.
13.After hearing the parties, the Court has perused the record.
14.It is not in dispute that the goods were in transit and at the time of inspection of the same, no e-way bill was produced.
15.It is not the case of the petitioner that by mistake or due to some technical glitch, the e-way bill could not be generated. In para no.7 of the writ petition, it has specifically been stated that no e-way bill was generated even after the movement of goods. Only after the seizure and detention of the goods in transit, the requisite documents were produced.
16.This Court in the case of M/s Aysha Builders and Suppliers (supra) has categorically held that in absence of e-way bill at the time of inspection, the seizure and detention, the intention to evade the payment of tax is attributed and penalty order cannot be said to be illegal.
17.Similar view has been followed by this Court in the case of M/s Akhilesh Traders (supra).
18.So far as penalty order is concerned, no interference is called for by this Court in view of the peculiar facts and the judgments cited above by the learned A.C.S.C.
19.So far as the requisite document as prescribed under the GST Act is concerned i.e. tax invoice was accompanied with the goods in transit, in view of the Clause 6 of the Circular dated 31.12.2018 wherein it has specifically been stated that if tax invoice or any other specified document are accompanied with the consignment then either the consignor or the consignee should be deemed to be the owner of the goods.
20.In the case in hand, the tax invoice was accompanied with the goods in transit and therefore, the owner of the goods can be said to be the petitioner. The said contention was not accepted at the lower stage only on the ground that after the movement of goods and at the time of detention of the goods, the registration of the purchasing dealer has been suspended, but later on, the same was revoked and the registration has been restored. Once the registration has been restored, it cannot be said bad by stretch of imagination that the consignor or consignee are bogus.
21.The record further shows that at the time of movement of goods, the registration was valid but before it reach to its destination, the registration of the purchaser was suspended, but later on it has been restored. No adverse effect can illegally been drawn against the petitioner on the said ground as the purchaser was a registered dealer before its movement started. Further, once in the Circular dated 31.12.2018, it has specifically been stated that any of the specified document is accompanied with the goods in transit, the proceedings under Section 129 (1) (a) ought to have been initiated in view of the judgment of the cases of H/S Halder Enterprises (supra) & M/s Shahil Traders (supra).
22.In view of the peculiar facts and circumstances of case as stated above, the writ petition is partly allowed. The impugned orders are modified to the extent that the impugned orders must be treated as passed under Section 129 (1) (a) of the GST Act.
