# M/s Gurunanak Arecanut Traders v. Commissioner, Commercial Tax, Lucknow, U.P. & Anr

- **Citation:** (2025) 3 ILRA 263
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-03-05
- **Case number:** Writ Tax No. 1177 of 2022
- **Bench:** Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-gurunanak-arecanut-traders-v-commissioner-commercial-tax-lucknow-u-p-anr-53052
- **Pages:** 5

## Headnote

Civil Law - Sate Goods and Service Tax
Act, 2017- Section 68 read with Rule 138
& 138A -E-way bill was generated on the same
day after about three hours after the detention
of the goods- petitioner was not carrying out
the business at the place where the firm was
registered- registration of the firm was also suo
moto cancelled-post amendment in the Rule, it
has become obligatory that goods should be
accompanied with e-way bill -an intention to
evade the tax - description of goods declared
was different-goods declared were taxable @5%
while the goods found on verification were
taxable @18%..

W.P. dismissed. (E-9)

List of Cases cited:

## Text

3 All. M/s Gurunanak Arecanut Traders Vs. Commissioner, Commercial Tax, Lucknow, U.P. &
 Anr.
263
----------
(2025) 3 ILRA 263
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.03.2025

BEFORE

THE HON'BLE ROHIT RANJAN AGARWAL, J.

Writ Tax No. 1177 of 2022

M/s Gurunanak Arecanut Traders
 ...Petitioner
Versus
Commissioner, Commercial Tax, Lucknow,
U.P. & Anr. ...Respondents

Counsel for the Petitioner:
Ms. Pooja Talwar

Counsel for the Respondents:
C.S.C.

Civil Law - Sate Goods and Service Tax
Act, 2017- Section 68 read with Rule 138
& 138A -E-way bill was generated on the same
day after about three hours after the detention
of the goods- petitioner was not carrying out
the business at the place where the firm was
registered- registration of the firm was also suo
moto cancelled-post amendment in the Rule, it
has become obligatory that goods should be
accompanied with e-way bill -an intention to
evade the tax - description of goods declared
was different-goods declared were taxable @5%
while the goods found on verification were
taxable @18%..

W.P. dismissed. (E-9)

List of Cases cited:

1. M/s. Modern Traders Vs St. of U.P. & ors.,
2018 NTN 187 1287 of 2024

2. Axpress Logistics India Pvt. Ltd. Vs U.O.I. &
ors., 2018 NTN 245

3. Raj Iron and Building Materials Vs U.O.I.,
2018 UPTC 217
4. M/s. Falguni Steels Vs St. of U.P. & ors., 2024
UPTC 221

5. Asharaf Ali K.H. Vs The Assistant St. Tax
Officer & ors., WRIT TAX No. - 1177 of 2022[3]
2021 UPTC 469

6. M/s. Jhansi Enterprises, Nandanpura, Jhansi
Vs St. of U.P. & ors., Writ Tax No. 1081 of 2019,
decided on 01.03.2024

7. M/s. Akhilesh Traders Vs St. of U.P. & ors.,
Writ Tax No. 1109 of 2019, decided on
20.02.2024

(Delivered by Hon'ble Rohit Ranjan
Agarwal, J.)

1. Heard Ms. Pooja Talwar, learned
counsel for the petitioner and Sri Arvind
Kumar Mishra, learned Standing Counsel
for State.

2. Through this writ petition, a
challenge has been made to order dated
16.06.2022 passed by Commercial Tax
Officer, Sector-3 (Mobile Squad), Etah
exercising power under Section 129(1) of
the State Goods and Service Tax Act, 2017
and order dated 24.06.2022 under Section
129(3) and also quashing has been sought
for the demand of tax and penalty of
Rs.90,62,400/- as well as appellate order
dated 18.08.2022.

3. The brief facts of the case are that
petitioner is a registered dealer under State
Goods
and
Service
Tax
Act,
2017
(hereinafter called as "the Act of 2017").
He has sold 400 bags of Arecanut vide tax
invoice dated 09.06.2022 to M/s. Jagdamba
Enterprises, Nagpur which is also said to be
a registered dealer in his respective State.
The said Arecanut was being transported
from Delhi to Nagpur, Maharastra by M/s.
Ravi Goods Transport. The goods were
intercepted at Mathura at 4:28 a.m. on
264 INDIAN LAW REPORTS ALLAHABAD SERIES
10.06.2022. The goods while in transit
were not carrying the e-way bill. The e-way
bill was generated on 10.06.2022 at 7:36
a.m. and was valid till 16.06.2022. A
physical verification of consignment of
goods was carried out. A detention order
was passed on 16.06.2022 under Section
129(1) of the Act of 2017. On verification,
it was found that the goods which were in
transit is Chikni Bhuni Supari (processed
Arecanut) and is taxable @ 18% and not
@5% as declared by the petitioner. A
show-cause
notice
was
issued
on
16.06.2022. When the show-cause notice
remained unattended, respondent no. 2 on
24.06.2022 passed order under Section
129(3) of the Act of 2017 and a demand of
tax and penalty of Rs.90,62,400/- was
raised against the petitioner. Aggrieved by
the said order, petitioner filed Writ Tax No.
933 of 2022 before the Division Bench of
this Court which was dismissed on
12.07.2022 on the ground that petitioner
has remedy of filing an appeal under
Section 107 of the Act of 2017. Thereafter,
an appeal under Section 107 of the Act was
preferred by petitioner before Additional
Commissioner, Grade-II (Appeal), Aligarh
which was rejected by order impugned
dated 18.08.2022. Hence, the present writ
petition.

4. Learned counsel for the petitioner
submitted that the detention order dated
16.06.2022 as well as penalty order dated
24.06.2022 have been passed without
giving any opportunity of hearing. It is
further
submitted
that
first
appellate
authority has not applied its mind while
rejecting the appeal and a non-speaking
order has been passed. According to her,
the person who had downloaded the e-way
bill was not present at the place of
detention and the driver of the vehicle had
moved out without intimation to the
petitioner. As soon as the driver realised
the mistake and informed the petitioner
about the non availability of the e-way bill,
the same was downloaded without delay
and
produced
before
the
authorities.
Reliance has been placed upon the decision
in case of M/s. Modern Traders vs. State
of U.P. and 2 others, 2018 NTN 187 and
decision of co-ordinate Bench in case of
Axpress Logistics India Pvt. Ltd. vs.
Union of India and 3 others, 2018 NTN
245. Reliance has also been placed upon
decisions rendered in Raj Iron and
Building Materials vs. Union of India,
2018 UPTC 217, M/s. Falguni Steels vs.
State of U.P. and others, 2024 UPTC 221
and decision of Kerala High Court rendered
in case of Asharaf Ali K.H. vs. The
Assistant State Tax Officer & others,
2021 UPTC 469.

5. It is next contended that the goods
have been declared as Arecanut while the
authorities are claiming it to be Chikni
Bhuni
Supari
(processed
Arecanut).
According to her, the misclassification of
goods cannot be basis of detention of goods
in transit. The taxing authorities could at
the most detained the goods for purpose of
preparing the relevant papers for effective
transmission to the judicial assessing
officers and nothing beyond.

6. Learned Standing Counsel while
opposing the writ petition submitted that
there was an intention to evade the tax. He
further submitted that goods which were
intercepted while in transit were being
transported without e-way bill. The vehicle
No. NL-01-Q-5655 was intercepted at
about 4:28 a.m. while the e-way bill was
downloaded after it was issued at 7:36 a.m.
on 10.06.2022 i.e. after almost three hours.
Further, when the petitioner firm was
checked on GST portal, the signature of
3 All. M/s Gurunanak Arecanut Traders Vs. Commissioner, Commercial Tax, Lucknow, U.P. &
 Anr.
265
proprietor of the firm, Gursen Singh on the
rent agreement was different from that of
tax invoice issued for the transaction.

7. The driver of the vehicle in his
statement stated that goods were taken
from other vehicle and it was loaded in the
vehicle in Bakauli, Delhi. The firm has
neither main place of business nor
additional place of business at Bakauli,
Delhi. Further, place of dispatch in
subsequent e-way bill issued reflects North
West Delhi, PIN Code 110041 while PIN
Code of
Bakauli
is
110036. These
evidences show that registration is being
misused to hide the original source of
transportation and clearance of goods. On
the basis of GSTIN, deficiencies found in
checking of seller firm, M/s. Gurunanak
Arecanut Traders, Delhi (petitioner), a
letter was sent to Assistant Commissioner,
SGST,
Zone-5,
Ward-62,
Delhi
for
investigation of the firm. An inquiry report
dated 14.06.2022 was sent, in which place
of business of firm was not found to be
traceable and process for suo moto
cancellation has been marked against the
firm.

8. According to learned Standing
Counsel, this clearly proves the evasion of
tax due to mismatch between unidentified
goods owner in the name of present seller.
At the time of investigation, no business
activity was found at the seller's shown
trading place. Further, verification of goods
revealed that chopped smooth roasted betel
nut (processed) were loaded while they
have been declared as Arecanut-201 goods,
while on physical verification goods fall
under the category of Betel Nut (HSN Code
21069030) which are taxable @18%,
whereas tax was charged @5%. It was
further contended that buyer firm M/s.
Jagdamba Enterprises, Nagpur, Maharastra
was only registered on 05.01.2022 and has
purchased goods from only one firm M/s.
Harsh International, Delhi. According to
him, the facts reveal that transaction in
question was being done with an intention
to evade tax by organised group which is in
violation of Section 68 read with Rule 138
and 138A of the Act of 2017 and it attracts
the provision of Section 20 of IGST Act,
2017
read
with
Section
129
of
UGST/CGST Act. Moreover, the notice
was provided on 16.06.2022 to driver of the
vehicle and was also sent through e-mail to
consignee and consignor on 16.06.2022 but
no clarification was received from anyone
on their behalf.

9. It was lastly contended that the
judgment relied upon by petitioner relate to
the period where the detention of goods
was prior to April, 2018. According to him,
in instances of detention that occurs
subsequent to April, 2018, e-way bill is
mandatory and required to be carried along
with goods. Reliance has been placed upon
the decision of co-ordinate Bench in case of
M/s. Jhansi Enterprises, Nandanpura,
Jhansi vs. State of U.P. and others, Writ
Tax No. 1081 of 2019, decided on
01.03.2024 and decision rendered in case
of M/s. Akhilesh Traders vs. State of
U.P. and others, Writ Tax No. 1109 of
2019, decided on 20.02.2024.

10. I have heard respective counsel for
the parties and perused the material on
record.

11. The sole question for consideration
is whether carrying e-way bill is mandatory
for the movement of goods from one place
to another. The question is no more res
integra after the 14th Amendment of the
Uttar Pradesh Goods and Service Tax
Rules, 2017 which came into effect from
266 INDIAN LAW REPORTS ALLAHABAD SERIES
01.04.2018. Post amendment in the Rule, it
has become obligatory that goods should be
accompanied with e-way bill. The coordinate Bench in Akhilesh Traders
(supra) had held that in case goods are not
accompanied by e-way bill, a presumption
may be read 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. Relevant
paras 7 and 8 are extracted hereasunder:-

"7. 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.

8. In the present case, one comes
to an inexorable conclusion that the
petitioner has not been able to rebut the
presumption of evasion of taxes, as he has
not been able to explain the absence of
invoice and the E-Way Bill. 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. 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."

12. In Jhansi Enterprises (supra), the
co-ordinate Bench following the decision
rendered in Akhilesh Traders (supra)
further
held
that
mere
furnishing
of
documents subsequent to interception cannot
be a valid ground to show that there was no
intention to evade tax. The Court further held
that reliance placed upon the decision by
petitioner therein was of transaction prior to
April, 2018 but after April, 2018, those
difficulties have been resolved and there is no
difficulty in generating and downloading the
e-way bill. The Court held as under:-

"11. Mere furnishing of the
documents subsequent to the interception can
not be a valid ground to show that there was
no intention to evade tax. There must be some
reasonable grounds to justify the nonproduction of documents at the proper time.

12. Furthermore, the judgments
upon which the petitioner is relying are prior
to April 2018, when there were actually some
difficulties with the generation of e-way bill.
But after April, 2018 those difficulties have
been resolved and now there is no difficulty
in generating and downloading the e-way
bill.

13. The argument raised by the
counsel appearing on behalf of the petitioner
that the vehicle was parked at the godown for
unloading is not supported by the facts. The
interception of the vehicle was in a place
away from the godown and this entire
argument is obviously an afterthought.
Accordingly, the application of Section
129(3) of the Act by the authorities is valid
and just in law.

14. In light of the above, I am of the
view that the petitioner herein has not
complied with the provisions of law, hence
the steps taken by the respondent authorities
are proper and in accordance with the law
and require no interference by this court. "

13. In the instant case, it is an admitted
case that the goods were intercepted by
respondent no. 2 on 10.06.2022 at 4:28
a.m., while the e-way bill was generated on
3 All. Surendra Gupta Vs. Appellate Authority State GST/Addl. Commissioner Grade II & Ors.
267
the same day at 7:36 a.m. after about three
hours after the detention of the goods.
Moreover, on the inquiry it was found that
the petitioner was not carrying out the
business at the place where the firm was
registered. The registration of the firm was
also suo moto cancelled.

14.
The
argument
raised
by
petitioner's counsel that notice was not
served before order dated 24.06.2022 was
passed is totally against the material on
record which not only reveals that notice
was served upon the driver but it was also
sent through e-mail to both the seller and
buyer on 16.06.2022 which remained
unattended.
Once
finding
has
been
recorded by authorities and petitioner firm
never participated in the proceedings before
the authorities, no case is made out for
interference by this Court.

15.
Moreover,
conduct
of
the
petitioner clearly reveals that an intention
to evade the tax is there as not only the
goods in transit were not accompanied by
e-way bill but also the description of goods
declared by petitioner was different which
was intercepted by the taxing authorities on
10.06.2022. Goods declared were taxable
@5% while the goods found on verification
were taxable @18%.

16.
Reliance
placed
upon
the
Division
Bench
judgment
is
distinguishable in the facts of the present
case as in those cases, the transaction was
prior to April, 2018 where the benefit was
given to those assesses. It is mandatory
on the part of the seller to download the
e-way bill once the goods are put in
transit. Subsequent downloading of e-way
bill would not absolve the liability under
the Act.

17. No case for interference is made
out.

18. The writ petition fails and is
hereby dismissed.
----------
(2025) 3 ILRA 267
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 28.03.2025

BEFORE

THE HON'BLE PIYUSH AGRAWAL, J.

Writ Tax No. 1892 of 2024

Surendra Gupta ...Petitioner
Versus
Appellate Authority State GST/Addl.
Commissioner Grade II & Ors.
 ...Respondents

Counsel for the Petitioner:
Nikhil Kumar, Vagish Yadav

Counsel for the Respondents:
Kaushalendra Nath Singh, Ankur Agrawal,
C.S.C., Gopal Verma

Petitioner paid one time lease rent amounting to
Rs.97,18,500/- to the New Okhla Development
Authority ( 'NOIDA') and also paid the GST @
18%- the NOIDA issued a tax invoice to the
petitioner-he furnished his return u/s 39 of the
CGST/UPGST Act- due to the mistake on the
part of the NOIDA, the same was not reflecting
in the form GSTR-3B-proceedings were initiated
u/s 61 of the CGST Act-impugned order -
appeal-rejected-impugned-petitioner cannot be
permitted to suffer to the mistake committed on
the part of NOIDA-petitioner paid the legitimate
tax to NOIDA, which was not deposited under
the
proper
head
-petitioner
must
be
compensated by NOIDA within 15 days.

W.P. disposed. (E-9)

List of Cases cited: