GST | Production Of Invoice, E-Way Bill After Detention Does Not Absolve Assessee Of Penalty: Allahabad High Court

The Allahabad High Court has held that absence of tax invoices and/or e-way bill at the time of interception and their subsequent production does not absolve the assesee from the liability of penalty under the Goods and Service Tax Act.

“Production of these documents subsequent to the interception cannot absolve the petitioner from the liability of penalty as the very purpose of imposing penalty is to act as a deterrent to persons who intend to avoid paying taxes owed to the Government,” held Justice Shekhar B. Saraf.

The Court held in absence of tax invoices and/or e-way bill with the goods in transit, the burden to prove that there was no intention to evade tax shifts on the assesee. The Court held that in absence of such documents with the goods in transit, it can be presumed that there was an intention to evade tax on part of the assesee, unless proved otherwise.

“This Court in umpteen cases where penalties were being imposed under Section 129 of the Act though held that an intention to evade tax should be present, however, in the event the goods are not accompanied by the invoice or the e-way bill, a presumption may be raised that there is an intention to evade tax. Such a presumption of evasion of tax then becomes rebuttable by the materials to be provided by the owner/transporter of the goods,” held the Court.

At the time of interception, petitioner's goods were not accompanied by E-Way Bill, invoice and bility. The documents were produced before the authorities after interception.

Relying on the decision of the Allahabad High Court in M/s Axpress Logistics India Private Limited v. Union of India and others and M/s Modern Traders v. State of U.P. and others, counsel for petitioner argued that as long as the documents were produced before passing of the detention order, no penalty could be imposed on him. Further, it was argued that no intention to evade tax had been established by the Department.

Counsel for respondent argued that post April 2018, it was mandatory that the goods in transit be accompanied with the e-way bill. It was submitted that since the goods were neither accompanied by the e-way bill nor the tax invoice and bilty, the burden to prove no intention to evade tax had shifted from the department to the assesee.

The Court held that not carrying e-way bill and invoices cannot be treated as a technical or clerical error. In such cases, the burden to proof no intention to evade tax is on the assesee and not the department.

The Court held that production of these documents after interception of goods does not absolve the assesee of the liability to pay penalty. The Court held that imposition of penalty to deter people from tax evasion.

“It is clear that if the goods had not been intercepted, the Government would have been out of its pocket with respect to the GST payable on the said goods,” held the Court while dismissing the writ petition filed by the assesee.

Case Title: M/S Akhilesh Traders vs. State Of U.P. And 3 Others 2024 LiveLaw (AB) 114 [WRIT TAX No. - 1109 of 2019]

Case citation: 2024 LiveLaw (AB) 114

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