GSTAT Lucknow Quashes ₹6.62 Lakh Demand Against Jai Enterprises, Says Suspicion Can't Prove Tax Evasion

The Lucknow Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) on 16 September held that tax and penalty cannot be sustained merely on an inference that goods had been transported earlier or that e-way bills had been reused without evidence establishing either.

A Two-Member Bench comprising Judicial Member Santosh Kumar Srivastava and Technical Member Arvind Kumar allowed Jai Enterprises' appeal and set aside the order of the Additional Commissioner Grade-2 (Appeals), Kanpur, which had upheld a demand of Rs. 6,62,077 under the Central GST/UP GST Acts. It observed:

“intention cannot be presumed merely from suspicion, and a presumption of tax evasion cannot take the place of proof.”

The Department relied on toll plaza records and photographs showing that the vehicle carrying pan masala and tobacco had travelled from Kanpur towards Etawah, returned towards Kanpur and later travelled towards Auraiya on the same day. It concluded that the goods covered by the invoices and e-way bills had already been transported and that the documents were being reused.

The Tribunal found no discrepancy in the description, quantity, value or ownership of the goods and noted that they were accompanied by valid tax documents.

It held that the finding of re-transportation was principally based on an inference drawn from the vehicle's earlier movement, without independent evidence establishing that the same goods had completed an earlier journey or had been delivered.

Further, the Bench found that the Department had failed to establish either that the goods were transported in violation of GST law or that the e-way bills had been reused.

Accordingly, the GSTAT allowed the appeal and directed that any amount deposited pursuant to the detention and penalty proceedings be refunded in accordance with law.

For the Appellant: Alekh Agarwal, Advocate

For the Respondent: Ashutosh Mishra, Assistant Commissioner, SGST