GST UPDATE

Imposing of penalty and detention of goods based on mere allegation of re-using E-way bill once generated in relation to the goods transported is not valid unless the same is supported by corroborative evidence.

Appeal No.: APL/33/LCK/2026

Tribunal: GSTAT (Lucknow)

Case Title: Neptune Sales Corporation v. Additional Commissioner GR-2 Appeal-IV Lucknow

Outcome:Appeal was allowed and the impugned order was set aside.

Judgement Date: 25.08.2026

BRIEF FACTS OF THE CASE:

M/s Neptune Sales Corporation (hereinafter referred to as Appellant). In the instant case, the goods were being transported from the business premises of the appellant to declared destination under valid tax invoice, e-invoice and e-way bill. The said goods were intercepted on the basis that upon earlier verification of the E-way bill at one place at about 04:15 A.M. and then subsequently at another location at around 12:45 P.M. on the same day, which indicates that goods had been re-transported based on the previously used documents. Subsequently, a show cause notice (SCN) was issued by the department. The allegation raised were confirmed by the adjudicating authority, thereby, appellant preferred an appeal before Commissioner (Appeals). Appellate authority upheld the order in original. Thus, the aggrieved appellant moved an appeal before the GSTAT.

QUESTION BEFORE HON’BLE TRIBUNAL:

Whether the goods being transported by the appellant first time or second time using same E-way Bill?
Whether a Show Cause Notice be issued based on mere suspicion without collaborating the allegations with the evidence?

BRIEF ARGUMENTS BY APPELLANT:
Appellant submitted following contentions: -

That the goods were transported under valid Invoice, E-invoice of the goods and corresponding E-way bill. Further, there is no evidence in possession of the department which substantiates that the goods were transported in contravention of the law.
That there is no mens rea on the part of the appellant as the tax has been charged in the bills with no malafide intent. Further, that the E-way bill as well as E-invoice were downloaded at the time of transportation of the goods i.e. before detention and seizure. Further, that the transaction was within its validity period.
Further, that the show cause notice cannot be issued merely on the basis of suspicion. There should be a prima facie material on the basis of which the notice issuing authority is satisfied that the goods are liable to be seized.
Along with that, argued that good were detained merely on the basis of presumptions and assumptions which renders the entire proceedings invalid.
Reliance was placed upon various judicial pronouncements in the case of
M/s Satyam Shivam Papers Pvt Ltd. v. Assistant Commissioner of S.T., Hyderabad [2021 (50) G.S.T.L. 459 (Telangana)]

Therefore, impugned order should be set aside.

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

Revenue Department contended that:

That the order in original and order in appeal were proper and valid and does not require any interference.

FINDINGS & JUDGEMENT:

Following are the findings of the Tribunal in the instant case:
Based on the contentions of both the parties, following are the observations and judgment of the Tribunal:

That the material placed on record does not establish any discrepancy with regards to the quantity, value, description or ownership of goods. Further, the goods accompanied all the requisite and valid documents like Invoice, E-way bill, E-invoice etc.
That the Commissioner (Appeals) held that the appellant had again transported the goods on the basis of documents already used which automatically proves the intention to evade tax. However, the goods were “re-transported” was based purely on inference from the earlier verification/location of e-way bill and that there was no independent and cogent evidence available which substantiates that goods had already completed an earlier journey had been delivered.
Reliance placed on Supreme Court judgement in the case of Assistant Commissioner (ST) & Ors. v. M/s Satyam Shivam Papers Pvt Ltd. & Anr. (Supra) in which it was held that no fault or intent to evade tax could be inferred merely from the circumstances relied upon by the revenue.

Along with that, reliance placed upon the judgement by Allahabad High Court in the case of M/S Shri Surya Traders vs. Union Of India [2022 (63) G.S.T.L. 439 (All.)]held that goods can’t be detained on the basis of assumptions and presumptions if the movement of goods is in compliance with the provisions of GST law.
In the case of M/s. Anandeshwar traders vs. state of U.P. [2021 (49) G.S.T.L. 233 (All.)] in which it was held that Revenue presumed reuse of E-way bill merely on the ground that the goods did not moved within 24 hours of generation of E-way bill which was not happened, no fresh material was allowed to be admitted.
Further reliance was placed upon the Allahabad High Court judgement in the case of M/s B.L. Agro Oils Ltd. Barielly [(Writ C No. 31593 of 2019] in which it was held that the onus is on the seizing authority to prove via evidence that e-way bill is being re-used. In the instant case, there is no such evidence produced by the seizing authority to substantiate the allegation.

Based on the examination of the facts placed on the record, t was held that the department failed to establish that the goods transported in contravention of the provisions of the GST Act or the Rules as well as re-using E-way bill. Therefore, the decision of the Commissioner (Appeals) that intention to evade tax is automatically proved is legally/factually unsustainable. Intention cannot be presumed merely on suspicion.
The department failed to establish any cogent material such as crossing of toll plaza during the course of the transaction of goods in same day, which substantiates the contention that the there was re-use of an earlier E-way used bill.
The reliance placed upon the judgement in the case of M/s Falguni Steels. V. State of U.P. and other by the first appellate authority it was observed that the findings portion of the judgement shows that the department has to prove intention to evade tax however, in the instant case, department failed to prove the intention to evade tax. Hence, this judgement is distinguishable in the instant case.

Thus, the appeal filed by the appellant was allowed and the impugned order was set aside.

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GST update /2026-27/0085

GST UPDATE

BRIEF FACTS OF THE CASE:

QUESTION BEFORE HON’BLE TRIBUNAL:

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

FINDINGS & JUDGEMENT:

Opinion

Author’s Comment:

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