# M/s Jhansi Entp. Nandanpura, Jhansi v. State of U.P. & Ors

- **Citation:** (2024) 3 ILRA 1804
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-03-01
- **Case number:** Writ Tax No. 1081 of 2019
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-jhansi-entp-nandanpura-jhansi-v-state-of-u-p-ors-51621
- **Pages:** 6

## Headnote

The Goods and Services Tax (GST) Act,
2017- Section 129(3) - registered dealer -
goods in transit - vehicle intercepted - neither
invoice nor e-way bill were accompanying the
goods at the time of interception - order for
physical verification/inspection - e-way bill
generated after the interception - documents
produced
subsequent
to
interception
-
contravention of the provisions of the Act and
Rules - contravention cannot be treated as a
mere common mistake - burden of proof shifts
to the assessee - presumption may be raised
that there is an intention to evade tax -
petitioner not able to rebut the presumption of
evasion of tax - absence of invoice and e-way
bill not explained with proper and reasonable
explanation - mere furnishing of documents
subsequent to interception cannot absolve the
petitioner from liability of penalty - purpose of
imposing penalty is to act as a deterrent - if the
goods
had
not
been
intercepted,
the
Government would have been out of its pocket
with respect to the GST payable - application of
Section 129(3) of the Act valid and just in law -
no interference required .

Writ petition dismissed. (E-9)

Cases Cited:
3 All. M/s Jhansi Entp. Nandanpura, Jhansi. Vs. State of U.P. & Ors.
1805

## Text

1804 INDIAN LAW REPORTS ALLAHABAD SERIES
rejected the same on the basis of only the
factual aspect that the distance between
Delhi and Meerut is about 75 kilometers.
The presumption that has been made by the
authorities that there was intention to evade
tax is based only on the factual matrix that
the distance between Delhi and Meerut is
only about 75 kilometers, which could have
allowed the petitioner to carry out multiple
trips. In my view, no other material has
been brought on record by the authorities to
indicate that there was any mens rea on the
part of the petitioner to evade tax.
Furthermore, it is to be noted that the other
columns of the E-Way Bills such as
description of the goods, quantity of the
goods and value etc. were found to be the
same as in the tax invoice accompanying
the goods. Furthermore, there was no
mismatch between the goods that was
being carried out in the vehicle and the
invoice.

7. In light of the above, the reason of
presumption of evasion of tax is without
any basis in law, and accordingly, the order
of detention and subsequent appellate order
are illegal and required to be set aside.

8. It is to be noted that it is upon the
authorities to pass orders under Section 129
of the Act on the basis of some
investigation that may indicate an intention
to evade tax. The same cannot be solely on
surmises and conjectures.

9. In light of the above, the order
levying penalty and order dated May 18,
2019 are quashed and set-aside. The writ
petition is allowed. Consequential reliefs to
follow. The respondents are directed to
return the security to the petitioner within
four weeks from date.
----------
(2024) 3 ILRA 1804
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.03.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1081 of 2019

M/s Jhansi Entp. Nandanpura, Jhansi
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agrawal

Counsel for the Respondent:
Sri Ravi Shankar Pandey, Addl. C.S.C.

The Goods and Services Tax (GST) Act,
2017- Section 129(3) - registered dealer -
goods in transit - vehicle intercepted - neither
invoice nor e-way bill were accompanying the
goods at the time of interception - order for
physical verification/inspection - e-way bill
generated after the interception - documents
produced
subsequent
to
interception
-
contravention of the provisions of the Act and
Rules - contravention cannot be treated as a
mere common mistake - burden of proof shifts
to the assessee - presumption may be raised
that there is an intention to evade tax -
petitioner not able to rebut the presumption of
evasion of tax - absence of invoice and e-way
bill not explained with proper and reasonable
explanation - mere furnishing of documents
subsequent to interception cannot absolve the
petitioner from liability of penalty - purpose of
imposing penalty is to act as a deterrent - if the
goods
had
not
been
intercepted,
the
Government would have been out of its pocket
with respect to the GST payable - application of
Section 129(3) of the Act valid and just in law -
no interference required .

Writ petition dismissed. (E-9)

Cases Cited:
3 All. M/s Jhansi Entp. Nandanpura, Jhansi. Vs. State of U.P. & Ors.
1805
1. M/s Akhilesh Traders v. State of U.P. and 3
others, Writ Tax No. 1109 of 2019, decided on
February 20, 2024.

2. M/s Hawkins Cookers Limited v. State of U.P.
and Others, Writ Tax No. 739 of 2020, decided
on 12.02.2024.

3. M/s Century Rayon v. Union of India, 2018
UPTC 528.

4. M/s Bhumika Enterprises v. State of U.P.,
2018 UPTC 536.

5. M/s Singh Tyres v. State of U.P., 2018 UPTC
539.

6. Mahaluxmi Traders v. State of U.P., 2018
UPTC 545.

7. M/s Shubham Fertilizers and Chemicals v.
State of U.P., 2018 UPTC 546.

8. M/s Zebronics India Pvt. Ltd. v. State of U.P.,
2017 UPTC 1207.

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. This is a writ petition under article
226 of the Constitution of India wherein the
petitioner has prayed for the issuance of a
writ of certiorari quashing the appellate
order dated August 30, 2019 passed by
Additional
Commissioner
Grade-2
(Appeal), Commercial Tax, Jhansi/the
respondent No. 3 and the penalty order
dated March 14, 2019 passed by Assistant
Commissioner, Commercial Tax, (Mobile
Squad) Unit Jalaun, Agra/the respondent
No.2. Further, a mandamus has been sought
directing the respondent authorities to
refund the amount of tax and penalty
deposited by the petitioner.

Facts

2. Factual matrix of the present case is
delineated below:

a. The petitioner is a registered
dealer under the provisions of Goods and
Services Tax Act, 2017 (hereinafter referred
to as 'the Act'). On March 10, 2019, the
petitioner had sold a consignment of TMT
Bars (sariya) to one M/s Sahai & sons, Orai
vide Tax Invoice No. 167. A vehicle
bearing No. MP 16H 1584 was mentioned
in the tax invoice for the transportation of
the goods.

b. On the same day i.e. March 10,
2019 at 01:11 P.M., the respondent No.2
intercepted the vehicle at Galla Mandi, Orai
and subsequently at 03:59 P.M. issued an
order for physical verification/inspection of
the conveyance, goods & documents under
section 68(3) of the Act on the ground that
neither e-way bill nor any other document
such as tax invoice, bill of supply, challan
or bill of entry related to the goods in
transit were produced before him at the
time of interception.

c. After the issuance of order for
physical
verification/inspection
of
the
conveyance, goods & documents, the
documents related to the goods such as Tax
Invoice and the e-way bill were produced
before the respondent No. 2. The said eway bill was not accepted by the
respondent No. 2 because it was generated
after the interception took place. As per the
respondent authorities, the aforementioned
e-way bill was generated with a delay of
almost 4 hours after the commencement of
transportation of the goods.

d. The show cause notice was
issued to the petitioner under Section
129(3) of the Act stating that the movement
of the goods was in contravention to the
provisions of the Act.

e. In pursuance of the show cause
notice, the petitioner appeared before the
authority and duly submitted his written
reply. In his reply, the petitioner stated that
due to non availability of computer
1806 INDIAN LAW REPORTS ALLAHABAD SERIES
operator, the e-way bill related to the goods
in transit could not be generated at proper
time but the same was generated later at
2:45 P.M. on March 10, 2019. He also
stated that the invoice related to the goods
could not be produced because it was
handed over to the receiver firm before the
interception took place.

f. Being dissatisfied with the
reply of the petitioner, respondent no. 2
rejected his reply and passed the order of
demand of tax and penalty dated March 14,
2019.

g.
The
petitioner
thereafter
deposited the amount of Rs.3,97,224/-
towards tax and penalty, after which the
respondent No. 2, released the goods in
favor of the petitioner. Aggrieved by the
order dated March 14, 2019 passed by the
respondent No. 2, the petitioner preferred a
statutory appeal before the respondent No.
3.

h. The respondent No. 3, vide its
order dated August 30, 2019, dismissed the
appeal and upheld the order dated March
14, 2019, passed by the Respondent No. 2.
i. Aggrieved by the order dated August 30,
2019 passed by the Respondent No. 3, the
petitioner has preferred the instant writ
petition before this Court.

CONTENTIONS
OF
THE
PETITIONER

3. Sri Shubham Agrawal, learned
counsel appearing on behalf of the
petitioner
has
made
the
following
submissions:

a. At the time of interception at
01:11 pm on March 10, 2019, the vehicle
was parked at the godown for unloading.

b. The petitioner could not
generate the e-way bill prior to the
commencement of transportation because
the computer operator, who was assigned
the duty of generating the e-way bill, did
not arrive earlier and the person looking
after the dispatch inadvertently dispatched
the goods on the belief that the e-way bill
would be generated within a short while
after the arrival of the computer operator
who generates the e-way bill.

c. The petitioner had downloaded
the e-way bill on March 10, 2019 at 02:42
P.M. and the respondent No. 2 had issued
the interception memo on the same day at
03:59 pm. In this situation, the e-way bill
had been generated prior to the issuance of
interception memo and no intention to
evade tax can be inferred in view of this
fact.

d. Section 129 of the Act is
applicable only when the consignment of
goods are in transit and it does not apply to
the present case since the vehicle was
parked and was not in transit when it was
intercepted by the respondent no. 2.

e. The petitioner had submitted
all
the
documents
relating
to
the
consignment of goods before the authorities
much prior to the passing of seizure order.

f. Since the petitioner had already
deposited the tax on the consignment of
seized goods and the relevant transaction
had also been disclosed in the returns
furnished by him, hence there was no
intention to evade tax on his part and thus
the impugned orders passed by the
authorities are liable to be set aside.

g. It is a settled law that if the eway bill is downloaded before seizure and
tax is also charged then seizure and penalty
are not justified. This position of law has
been held by the Division Bench of this
Court in M/s Century Rayon V. Union of
India reported in 2018 UPTC 528, M/s
Bhumika enterprises V. State of UP
reported in 2018 UPTC 536, M/s Singh
Tyres V. State of UP reported in 2018
3 All. M/s Jhansi Entp. Nandanpura, Jhansi. Vs. State of U.P. & Ors.
1807
UPTC 539, Mahaluxmi traders V. State
of UP reported in 2018 UPTC 545 and
M/s Shubham fertilizers and chemicals
V. State of UP reported in 2018 UPTC
546.

h. To buttress his argument, counsel
for the petitioner further relies upon the
judgment passed by the Division Bench of
this court in M/s Zebronics India pvt.
Ltd. V. State of UP reported in 2017
UPTC 1207 wherein it was held that
seizure of goods and penalty is not
sustainable under section 129 of the Act,
unless satisfaction is recorded about the
existence of intention to evade tax.

CONTENTIONS
OF
THE
RESPONDENTS

4. Sri Ravi Shankar Pandey, counsel
appearing on behalf of the respondent has
made the following submissions:

a. The provisions of Section 129
of the Act read with Rule 138 of the Uttar
Pradesh Goods and Service Tax Rules,
2017 (hereinafter referred to as 'the Rules')
required that where any person transports
any goods or stores any goods, while they
are in transit, in contravention of the
provisions of the Act or Rules made there
under, all such goods and conveyance used
as a means of transport for carrying the said
goods and documents relating to such
goods and conveyance shall be liable to
detention or seizure and every registered
person who causes movement of goods of
consignment
valuing
exceeding
fifty
thousand rupees (i) in relation to supply or
(ii) for reasons other than supply or (iii)
due to inward supply from an unregistered
person, shall before commencement of
such
movement,
furnish
information
relating to the said goods as specified in
Part 'A' of the e-way bill electronically on
the common portal along with other
information as may be required on the
common portal.

b. In view of above provisions,
the e-way bill is to be generated before the
commencement of the transportation of
goods, whether in respect of supply or
otherwise. In the present case, the Assistant
Commissioner, Commercial Tax, (Mobile
Squad) Unit Jalaun, Agra has stopped the
vehicle no. MP16H 1584 on 10.03.2019 at
01:11 P.M. At the time of interception of
the vehicle, the documents such as e-way
bill, invoice, bilty, etc. were not found
regarding the goods loaded in the vehicle.
In this way, the goods were being
transported without valid documents.

c. The petitioner has submitted a
vague reply of non availability of computer
operator. In this regard, it is submitted that
the generation of e-way bill is required as
mentioned in Rule 138 of the Rules and
therefore, it
was
obligatory
on
the
petitioner to have generated the e-way bill
which was not done and therefore, the
provisions were not followed by the
petitioner. It is further submitted that the
petitioner has generated the e-way bill on
10.03.2019 at 02:42 P.M., which was
actually after the time of interception of the
vehicle.

d. As per language of Section 129
of the Act, the seizure and release of the
goods depends on the infringement of the
provisions and the word mens rea has not
been specifically mentioned. The revenue
has relied upon the judgment given by this
Court in M/s Hawkins Cookers Limited
Vs State of U.P. and Others (Writ Tax No.
739 of 2020 decided on 12.02.2024) where
it has been held that "Now, such an
intention to evade tax may be presumed by
the department in cases where there is
wholesome disregard of the Rules. For
1808 INDIAN LAW REPORTS ALLAHABAD SERIES
example, in the event the goods are not
accompanied by the invoice or the e-way
bill is completely absent, 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."

e. The High Court of Calcutta in
Pushpa
Devi
Jain
Vs
Assistant
Commissioner of Revenue (WPA No. 178
of 2023 decided on 03.03.2023) and the
Kerala High Court in M/s EVM Passenger
Cars India Pvt. Ltd. Vs State of Kerala
[W.P.(C) No. 10565 of 2018 decided on
23.08.2023] has held that the seizure and
penalty order has been rightly upheld by
the authority due to non-following of the
provisions of the Act and Rules. In this
regard, it may be submitted that such
matter is related to year 2018-19. After
14th amendment
of the
Rule from
01.04.2018, a system has been well
developed about e-way bill and it was
obligatory on the part of the petitioner to
have generated the e-way bill which was
not complied with and the provisions were
not followed by the petitioner. In view of
these factual positions and legal provisions,
the action taken by the Mobile Squad
Authority and Appellate Authority is
legally justified as the goods were not
accompanied by the e-way bill which was
regarded as a breach of the provisions
contained under Section 129 of the Act read
with Rule 138 and 138(A) of the Rules.

ANALYSIS AND CONCLUSION

5. I have heard the learned counsel
appearing for the parties and perused the
materials on record.

6. Even though the petitioner failed to
produce the e-way bill in time due to
certain difficulties, the question which
arises before me is whether or not there
was any actual intention to evade tax on
part of the petitioner.

7. It is a well settled position of law
that if there is no intention to evade tax on
the part of a person then imposition of tax
and penalty is not proper and justified. But
there must be some reasonable grounds to
show that there was actually no intention to
evade tax on the part of tax payer.

8. In the present case, it is an admitted
fact that neither invoice nor e-way bill were
accompanying the goods when it was
intercepted
by
the
authorities.
This
contravention of rules can not be treated as
a mere common mistake. In this situation,
burden of proof for establishing that there
was no intention to evade tax shifts to the
assessee.

9. This court in case of M/s Akhilesh
Traders V. State of U.P. and 3 others
(Writ Tax no. 1109 of 2019 decided on
February 20, 2024) has held that in cases
where the goods are not accompanied by
the invoice and e-way bill, a presumption
may be raised that there is an intention to
evade tax. The relevant paragraphs of the
aforesaid judgment read as under:

"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
3 All. M/s Akhilesh Traders Pratapgarh Vs. State of U.P. & Ors.
1809
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."

10. The petitioner, in the present case,
could not explain the absence of invoice
and e-way bill with a proper and reasonable
explanation. Ergo, he has not been able to
rebut the presumption of evasion of tax.

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.

15. Accordingly the writ petition is
dismissed.
----------
(2024) 3 ILRA 1809
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.02.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Writ Tax No. 1109 of 2019

M/s Akhilesh Traders Pratapgarh
 ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Pranjal Shukla

Counsel for the Respondent:
C.S.C.

The Goods and Services Tax (GST) Act,
2017-
Section
129(3)
-
goods
were
intercepted - no E-Way Bill, invoice and bility
were present in the vehicle at the time of
interception
-
documents
were
produced
subsequent to interception - contravention of
the Rules cannot be treated to be a mere
technical or typographical mistake - when
goods are not accompanied by invoice or E-Way