Allahabad High Court Quashes GST Detention: Expired E-Way Bills Due to Mechanical Breakdown Do Not Establish Tax Evasion Intent
Overview of the Dispute
The Allahabad High Court recently ruled in favour of a transport company in a writ petition challenging detention and seizure proceedings initiated under Section 129(3) of the GST law. The Court set aside two adverse orders — the original order dated 25 December 2019 passed by respondent no. 3, and the appellate order dated 25 September 2020 passed by respondent no. 4 — holding that expiry of e-way bills attributable to a mechanical vehicle breakdown, unsupported by any discrepancy in goods or documents, cannot sustain a finding of tax evasion intent.
Background and Facts of the Case
The Consignments and Documents
Transporter Vs State of Uttar Pradesh (Allahabad High Court)
The petitioner, a registered transport company incorporated under the Companies Act with its registered office at Darcel House, Plot No. 55 P, Institutional Area, Sector 44, Gurugram 122003, Haryana, was engaged in the business of moving goods across states.
On 7 December 2019, the petitioner booked two consignments of HR Coils from the business premises of Tata Steel Ltd., Kanpur, destined for delivery in Punjab. The relevant documentation was as follows:
- Tax Invoice No. 2116055357 dated 7.12.2019 — covering 21.450 metric tonnes of HR Coil, issued in the name of Tata Steel Processing, Ludhiana, Punjab
- Tax Invoice No. 2116055358 dated 7.12.2019 — covering 22.40 metric tonnes, issued in the name of Sangeeta Steel Corporation, Ludhiana, Punjab
Both consignments were loaded onto Truck No. UP79 T 4783, and corresponding e-way bills were generated through the national GST portal prior to commencement of the journey.
The Breakdown and Its Consequences
During transit, the vehicle developed a mechanical fault. The truck was transported to a mechanic situated at Loha Mandi, Ghaziabad, with assistance from Sharma Crane Service. Repairs were carried out by a mechanic named Rahul Mistri, who issued Bill No. 103 dated 12 December 2019 as documentary evidence of the repair work undertaken.
While the vehicle remained at the repair location, the validity period of both e-way bills elapsed. The driver, however, failed to notify the consignor, consignee, or transporter about the expiry of the e-way bills during this period.
Interception and Proceedings
Once the vehicle resumed its journey after repairs, it was intercepted by GST authorities on the ground that the e-way bills accompanying the goods were no longer valid. Notably, the petitioner produced an updated e-way bill before the seizure order was formally passed. Despite this, the authorities were not satisfied with the explanation offered and proceeded to detain and seize the goods.