E-way bill exemption for intra-city movement upheld where recovery was based on allegations outside the show-cause notice.

A recovery demand cannot be sustained on a factual basis not contained in the show-cause notice, and the appellate finding based on intra-city movement was upheld. The notice alleged non-generation of e-way bills for inward supply, but the appellate authority found from the invoices that the goods were supplied within Surat and applied the Gujarat notification dated 19.09.2018 exempting intra-city movement from e-way bill generation. That factual finding was neither perverse nor arbitrary, so interference was unwarranted and the refund order stood.

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Issues: Whether the appellate order granting refund and setting aside recovery could be interfered with when the show-cause notice alleged non-generation of e-way bills for inward supply, but the appellate authority found that the goods were moved within the same city and the applicable notification exempted such movement.

Analysis: The challenge rested on the assertion that the assessee had transported goods from Surat to Kanpur without e-way bills. The notice, however, proceeded on a different footing: it specifically alleged that the suppliers had failed to generate e-way bills for the supplies made to the assessee and called upon the assessee to meet that charge. The record before the appellate authority showed invoices indicating supply within Surat, and the authority applied the Gujarat notification dated 19.09.2018 exempting intra-city movement from e-way bill generation. The Court held that findings cannot be based on allegations not contained in the notice and that the appellate finding on the factual matrix was neither perverse nor arbitrary.

Conclusion: The appellate order was upheld and the writ petition failed.

Ratio Decidendi: A demand or recovery cannot be sustained on a factual basis that is not part of the show-cause notice, and a factual finding supporting an intra-city e-way bill exemption will not be interfered with unless shown to be perverse or illegal.

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