M/S Jhansi Enterprises v. State Of U.P. And 2 Others

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD

Neutral Citation No. - 2024:AHC:37635 Court No. 1

THE HON’BLE SHEKHAR B. SARAF, J.

WRIT TAX NO. - 1080 OF 2019

M/S JHANSI ENTERPRISES, NANDANPURA, JHANSI

STATE OF U.P. AND OTHERS

For the Petitioner : Shubham Agrawal, Advocate

For the Respondents : Ravi Shanakar Pandey, Additional Chief Standing Counsel

Last heard on February 20, 2024 Delivered on March 01, 2024

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 impugned appellate order dated August 31,

2019 passed by Additional Commissioner Grade-2 (Appeal),

Commercial Tax, Jhansi/the respondent No. 3 and the impugned

penalty order dated March 16, 2019 passed by Assistant

Commissioner, Commercial Tax, (Mobile Squad) Unit Orai/the

respondent No.2. Further, a mandamus has been sought directing the

respondent authorities to refund the amount of tax and penalty

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

a. The petitioner is a registered dealer under the provisions of Goods

and Service tax act, 2017 (hereinafter referred to as ‘the Act’). On

March 09, 2019, the petitioner had sold a consignment of TMT

Bars (sariya) to one M/s Motilal Devendra kumar, Orai vide Tax

Invoice No. 166. A vehicle bearing No. MP 16H 2155 was

mentioned in the tax invoice for the transportation of the goods.

b. On March 10, 2019 at 10:43 A.M., the respondent No.2

intercepted the vehicle at Station Road, Orai and subsequently at

03:50 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

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 e-way 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. A 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

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 16, 2019.

g. The petitioner thereafter deposited the amount of Rs. 2,89,728/-

towards tax and penalty, after which the respondent No. 2,

released the goods in favor of the petitioner. Aggrieved by the

order dated March 16, 2019 passed by the respondent No. 2, the

petitioner preferred a statutory appeal before the respondent No.

h. The respondent No. 3, vide its order dated August 31, 2019,

dismissed the appeal and upheld the order dated March 16, 2019,

passed by the Respondent No. 2.

i. Aggrieved by the order dated August 31, 2019 passed by the

Respondent No. 3, the petitioner has preferred the instant writ

3. Sri Shubham Agrawal, learned counsel appearing on behalf of the

petitioner has made the following submissions:

a. At the time of interception at 10:43 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 11:07 A.M. and the respondent No. 2 had issued the

interception memo on the same day at 03:50 P.M. 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

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

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 e-way 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 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.

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

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 Orai has

stopped the vehicle no. MP 16H 2155 on 10.03.2019 at 10:43

A.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

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 11:07 A.M., which was actually after the time of

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 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

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

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

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

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

9. This court in case of M/s Akhilesh Traders V. State of U.P.

and 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

“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.”

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

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 non-production 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.

2024-03-01T14:36:00+0530 High Court of Judicature at Allahabad