Allahabad High Court Rules E-Way Bills and Tax Invoices Sufficient to Prove Physical Movement of Goods Under GST - Toll Receipts Not Compulsory

Introduction

The Allahabad High Court has delivered a significant judgment clarifying that toll plaza receipts are not mandatory documentary evidence for establishing the actual physical movement of goods under the Goods and Services Tax regime. The court emphasized that when an assessee has duly produced e-way bills and tax invoices, the revenue authorities cannot demand toll receipts as additional proof of transportation. This ruling came in the matter of Raghuvansh Agro Farms Limited Vs State of U.P. And 2 Others, where the High Court set aside the assessment orders passed by GST authorities.

Case Background and Factual Matrix

Nature of Business Operations

Raghuvansh Agro Farms Limited operates as a private limited company specializing in the supply of agricultural commodities and areca nuts. The company maintains regular books of accounts and has been discharging its tax liabilities in accordance with applicable provisions. The entity holds GSTIN No. 09AABCR8407N1ZW and conducts business operations involving interstate transactions.

Genesis of the Dispute

The controversy originated from a survey conducted by tax authorities on 22nd January 2019. Based on the findings of this survey, the Deputy Commissioner, State Tax, Sector 10, NOIDA issued a notice under Section 74 of the State GST Act in Form GST DRC-01 dated 7th April 2021. The company submitted its initial response on 7th May 2021, following which another notice dated 13th May 2022 along with a third reminder was issued.

The petitioner company filed a comprehensive reply accompanied by all relevant supporting documents on 17th June 2021. However, the adjudicating authority passed the impugned order dated 31st May 2023 without affording any opportunity for personal hearing to the assessee. Aggrieved by this order, the company preferred an appeal before the appellate authority, which was subsequently dismissed. The dismissal of the appeal compelled the company to approach the Allahabad High Court through the present writ petition challenging both the order dated 10th January 2025 passed by the appellate authority and the order dated 31st May 2023 passed by the assessing authority.

Contentions by the Petitioner Company

Jurisdictional Challenge

The petitioner's counsel raised fundamental jurisdictional objections, arguing that the company falls within the territorial jurisdiction of the Central GST authorities and not the State GST department. Specifically, the company comes under the jurisdiction of CGST Commissioner, Division III, Range XVI. The proceedings initiated by the Deputy Commissioner, State Tax, Sector 10, NOIDA were therefore challenged as being wholly without jurisdiction.

Furthermore, it was contended that there exists no valid notification for cross-empowerment of State GST officers issued upon the recommendation of the GST Council. Till the relevant date, only one notification regarding cross-empowerment had been issued, which pertained specifically to refund matters under Section 54 of the UPGST/CGST Act. In the absence of a proper cross-empowerment notification, the entire proceedings under the UP GST Act were argued to be jurisdictionally invalid.

Deficiency in Show Cause Notice

The petitioner's counsel emphasized that proceedings under Section 74 of the GST Act require the presence of specific ingredients such as fraud, willful misstatement, or suppression of facts to evade payment of tax or wrongful availment of input tax credit. The show cause notice issued to the company failed to mention any such ingredients or provide reasons indicating fraudulent intent or deliberate suppression.

The counsel argued that the adjudicating authority must expressly state in the show cause notice that the assessee has wrongly availed or utilized input tax credit due to fraud, willful misstatement, or suppression of facts. Without these basic ingredients, the proceedings become jurisdictionally invalid.

Substantive Compliance with GST Provisions

It was forcefully argued that all transactions in question were genuine and supported by complete documentation. The purchases from four different suppliers - M/s Sadguru Traders Meerut, M/s Sibri Traders Gurugram, Bihari Ji Packing Product Pvt. Ltd., and M/s Mahavir Enterprises - were all duly supported by tax invoices, e-way bills, and bilty receipts.

All payments were made through proper banking channels, making them fully verifiable. The purchases were duly reflected in the returns filed, specifically in GSTR-1, GSTR-2A, and GSTR-3B. Given this complete documentation and disclosure, no adverse inference could be drawn against the company.

Specific Transaction Analysis

Transactions with M/s Sadguru Traders, Meerut: The last transaction with this supplier occurred on 13th October 2018. Although subsequent survey proceedings found M/s Sadguru Traders to be non-existent and its registration was cancelled, the petitioner could not be held liable for this as the supplier was a registered dealer at the time of transaction and all provisions under Section 16 were duly complied with.

Transactions with M/s Sibri Traders, Gurugram: All supplies were covered by tax invoices, e-way bills, and were reflected in GSTR-1. Proceedings initiated against M/s Sibri Traders by order dated 22nd March 2021 were challenged before the Deputy Commissioner Anti-Evasion, CGST, Gurugram in Appeal No. 177 of 2022-23. The appellate authority set aside the order dated 22nd March 2021 by its order dated 2nd June 2023. Since the proceedings against the supplier itself were set aside, no adverse action could be taken against the petitioner.