Assessee not held liable for violating provisions if E-way bill generated prior to issuance of seizure order

Bans Steel vs State of U.P

The petitioner had sold goods to two parties vide invoice no. 21 and 22. The petitioner has generated the e-way bill against invoice no. 21, however due to some technical error the e-way bill against invoice no. 22 could not be generated.

During transportation of goods, the goods were detained on the ground that at the time of inspection of vehicle, no E-way bill was found with regard to invoice no. 22. Thereafter GST authorities had issued a show cause notice to the petitioner and passed the impugned order imposing tax liability to the extent of INR 3,82,168/- together with penalty of INR 3,82,168/-.

The petitioner submitted before the GST authorities the e-way bill in relation to invoice no. 22 after issuance of show cause notice, but before passing of the seizure order.

The Hon’ble Allahabad High Court held that at the time of interception of the goods, no E-way bill in respect of tax invoice no. 22 was produced, therefore, the goods were detained; however, before the seizure order could be passed and after issuance of show cause notice, the E-way bill in respect of tax invoice no. 22 was produced, in which no discrepancy was pointed out by any of the respondent authorities. The only ground for detention taken by the respondent authority is that once the goods in question was not accompanying with proper documents, there was intention to avoid the payment of tax.

Further, the GST authorities had full mechanism as well as power that after detaining the goods, if the same was not accompanied with the proper documents, the authority could have made survey of the business premises of the petitioner to find out the correctness of the transaction, but the respondent authorities have chosen in their wisdom in not doing so. Once E-way bill was produced before the seizure order could be passed, it could not be said that any contravention of the provision of the Act has been made by the Petitioner.

In view of the above, the impugned order passed by the respondent authorities were quashed and the writ petition was allowed accordingly.

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