GST update /2026-27/0103

M/s Jai Enterprises v. Dr. Anupama Goyal, Commissioner/Assistant Commissioner, State Tax, Kanpur & Ors.

GST UPDATE

Question answered in the Current Update

Whether the reuse of an e-way bill and tax invoice can be established merely from vehicle movement records, toll plaza photographs and the apparent similarity of goods?

Whether suspicion and circumstantial evidence, without establishing the complete chain of events, are sufficient to sustain detention and penalty proceedings?

Hon’ble Authority	GSTAT, Lucknow Bench
Case Title	M/s Jai Enterprises v. Dr. Anupama Goyal, Commissioner/Assistant Commissioner, State Tax, Kanpur & Ors.
Appeal No. & Citation	APL/82/LCK/2026
Date of Order	16.09.2026
Outcome	Appeal Allowed

Brief Facts of the Case

The goods of the appellant, M/s Jai Enterprises were being transported from Kanpur to Auraiya under valid tax invoices and e-way bills. The vehicle was intercepted by the Mobile Squad on the allegation that the same goods had already been transported earlier and that the invoices and e-way bills were being reused. The department inferred that the goods covered by the disputed invoices had already been transported and that the subsequent movement amounted to reuse of the same documents, indicating an intention to evade tax. The adjudicating authority imposed tax and penalty under Section 129(3) of the CGST/UPGST Act, 2017. The first appellate authority upheld the demand rejecting the appeal on both limitation and merits. Aggrieved, the appellant approached the GSTAT.

Brief Arguments by Appellant

Allegation of Re-Transportation Based on Presumption

The appellant contended that the department had alleged reuse of the tax invoices and e-way bills merely on the basis of toll plaza records, photographs and vehicle movement data. It was submitted that the earlier movement of the vehicle related to a different consignment and the demand was purely based on the presumptions.

Improbability of the Alleged Return Journey

The appellant submitted that the distance between Bara Toll Plaza and Auraiya was approximately 65–70 km, making it practically improbable for the vehicle to travel to Auraiya, unload the goods and return to the toll plaza within approximately two and a half hours. This was particularly so considering the prevailing heat, stoppages and other routine requirements of the driver. In support of this explanation, the appellant relied upon the statement/affidavit of the driver.

Goods Accompanied by Valid Documents

The appellant contended that the goods physically verified at the time of detention were fully covered by valid tax invoices and e-way bills. There was no discrepancy in the quantity, weight, value or description of the goods. It was further submitted that the invoices and e-way bills had been generated before transportation and were valid at the time of detention.

Absence of Evidence Establishing Intention to Evade Tax

The appellant submitted that the impugned orders had been passed by drawing an inference of tax evasion without establishing the complete chain of events leading to such a conclusion. It was argued that strong suspicion or presumption could not substitute legal proof and that the department had failed to establish any intention to evade tax.

Reliance on Judicial Precedents

Case LAW	Citation
Umacharan Shaw & Bros. v. CIT	(1959) 37 ITR 271 (SC).
State of Kerala v. M.M. Mathew	(1978) 42 STC 848 (SC).
Kumar Electric Works v. CST	[1984] UPTC 1272.
M/s Charu Enterprises Abubkar Nagar v. State of U.P. & 3 Others	2018 NTN (Vol. 67) 157.
M/s IRC (India) Ltd. v. State of U.P. & 3 Others	2018 NTN (Vol. 67) 184 (Allahabad High Court).

Brief Arguments by Respondent

The departmental authorities relied principally on toll plaza records, photographs and vehicle movement data. According to the department, the vehicle had travelled towards Etawah, returned towards Kanpur in an apparently empty condition, and was subsequently found carrying goods while travelling towards Auraiya. Since the photographs showed similar goods during the relevant movements, the department concluded that the same goods had been transported earlier and the documents had been reused.

Findings and Judgement

No Discrepancy in the Goods or Accompanying Documents

The Tribunal observed that the material on record did not establish any discrepancy in the description, quantity, value or ownership of the goods. The goods were accompanied by the relevant tax documents, including the invoice/e-invoice and e-way bill. No independent and cogent evidence had been produced to establish that the same goods had completed an earlier journey or had already been delivered. The Tribunal also observed that the photographs relied upon by the department did not conclusively establish that the goods were the same.

Reliance on Judicial Precedents

The Tribunal relied upon the following judicial pronouncements:
- Assistant Commissioner (ST) & Ors. v. M/s Satyam Shivam Papers Pvt. Ltd. & Anr., SLP (C) No. 21132/2021, decided on 12.01.2022: The Tribunal referred to the Supreme Court's consideration of the reasoned judgment of the Telangana High Court, observing that the intention to evade tax could not be inferred merely from the circumstances relied upon by the Revenue.
- M/s Shri Surya Traders v. Union of India, decided on 06.01.2022: The Allahabad High Court held that where the movement of goods was in compliance with the provisions of the GST Act, the goods could not be detained on the basis of presumptions and assumptions.
- State of Kerala v. M.M. Mathew, 1978 STC (42) 848: The Tribunal referred to the principle that a presumption cannot take the place of evidence and that strong suspicion, strange coincidences and grave doubt cannot substitute legal proof.
- M/s Anandeshwar Traders v. State of U.P., [2021 U.P.T.C. (Vol. 197) 421]: The Tribunal noted that the presumption of reuse of an e-way bill merely because the goods had not moved within 24 hours of its generation was not sustainable. The decision also held that fresh material could not be admitted in appeal at the behest of the Revenue in the circumstances of that case.
- M/s B.L. Agro Oils Ltd., Bareilly, Writ-C No. 31593 of 2019, decided on 31.01.2023: The Allahabad High Court held that it was for the seizing authority to establish, by evidence, that the e-way bill was being reused. In the absence of such evidence, reuse of the bill could not be established.

Suspicion Cannot Substitute for Legal Proof

Relying upon judicial precedents, the Tribunal held that strong suspicion, coincidence or doubt could not take the place of legal proof. The department could not presume an intention to evade tax merely from the circumstances surrounding the vehicle's movement. The Tribunal specifically observed that the finding of the first appellate authority that the intention to evade tax was “automatically proved” was legally and factually unsustainable. The Tribunal accordingly held that intention to evade tax cannot be presumed merely from suspicion, and a presumption of tax evasion cannot take the place of proof.
Accordingly, the appeal was allowed, and the impugned orders were set aside. The Tribunal also directed that any amount deposited pursuant to the impugned detention and penalty proceedings be refunded in accordance with law.

CA Pradeep Jain_

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GST update /2026-27/0103

GST UPDATE

Question answered in the Current Update

Brief Facts of the Case

Brief Arguments by Appellant

Brief Arguments by Respondent

Findings and Judgement

Opinion

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