E-Way Bill Generated After Detention Cannot Cure GST Violation: GSTAT Bengaluru

The GST Appellate Tribunal, Bengaluru Bench, has dismissed an appeal against a penalty imposed on a taxpayer after GST authorities found that goods were being unloaded at a destination different from the one mentioned in the accompanying tax documents.

The Tribunal held that the subsequent generation of an e-way bill and invoice after interception could not cure the violation under Section 129 of the CGST Act, as the required documents for the actual destination were not available when the vehicle was intercepted.

A Division Bench comprising Judicial Member Srikanth Venkatraman and Technical Member Sudha Koka upheld the order of the Revisional Authority, which had restored the penalty imposed by the proper officer.

The case arose from the interception of a vehicle carrying plywood at Udayambag, Belagavi, on October 6, 2020.

The goods were being unloaded at REC Flow Technology LLP, although the tax invoice and e-way bill available with the vehicle covered transportation from Intercon Wood Industries, Perumbavoor, Kerala, to the appellant's premises at Vadgao, Belagavi.

The proper officer found that there were no corresponding documents for the movement of the goods to REC Flow Technology LLP and imposed a penalty under Section 129. The appellant subsequently generated an e-way bill and tax invoice on the same day.

The first Appellate Authority had granted relief to the appellant, holding that the goods had reached the destination within the validity period of the e-way bill and that there was no intention to evade tax. It had reduced the penalty to Rs.500 each under the CGST and KGST Acts.

The Revisional Authority, however, reversed this order and restored the original penalty, observing that the e-way bill relied upon by the appellant had been generated only after the interception and was an afterthought to cover the contravention.

Before the Tribunal, the appellant argued that the supplier, transporter and recipient were registered dealers, the transaction was genuine and recorded in the books, and the e-way bill could not be generated earlier due to a technical glitch. It also argued that the revisional proceedings were barred by limitation.

The bench rejected the limitation objection. Referring to the Supreme Court's decision in Cognizance for Extension of Limitation and its subsequent decision in G.R. Infra Projects Ltd. v. State of Madhya Pradesh, it held that the COVID-related exclusion of limitation applied to departmental proceedings as well.

On the merits, the Tribunal noted that Section 68 requires the person in charge of a conveyance to carry the e-way bill and other prescribed documents, while Section 129 applies where goods are transported in contravention of the Act or Rules.

The Tribunal found that the appellant was aware of the procedure but had not generated the e-way bill and tax invoice for delivery to REC Flow Technology LLP before the movement. It also noted that no evidence was produced to substantiate the claim of a technical glitch.

"...The appellant had raised an e-way bill and tax invoice only after coming to know about the detention of goods. It is not possible to accept the contention of the appellant that the e-way bill could not be generated due to technical glitch. No evidence was furnished by the appellant to support this plea. It is clear the appellant had the intention to evade the payment of taxes due to the Government...", the bench said.

The Tribunal held that the subsequent generation of the documents after interception was an afterthought and that the absence of the required documents at the time of interception amounted to a wilful act intended to evade payment of tax.

"We are of the view that the absence of tax invoices and e-way bill at the time of interception has to be treated as wilful act to evade payment of taxes. When the mandate of law is that the goods being transported must be accompanied with relevant statutory documents and if the goods are being transported without the relevant statutory documents, the consequences would follow", the Court said.

It also distinguished the cases relied upon by the appellant concerning expired e-way bills and procedural violations, observing that those decisions did not apply to the facts of the present case.

The Tribunal accordingly confirmed the Revisional Authority's order and dismissed the appeal.

For the Appellant: Jagadish Shankar Kamkar, Advocate

For the Respondent: Priya Basappa, DC/AR (State)