E-way bill compliance before mandatory rollout could not by itself justify goods detention, seizure, or penalties without tax-evasion evidence.
Rule 138's compulsory e-way bill requirement for inter-State movement became operational nationwide from 1 April 2018, rather than on 24 November 2017. Non-production of an e-way bill before that mandatory commencement could not, by itself, constitute a breach supporting detention, seizure, or penal action. Where goods matched the tax invoice and transport documents, and no discrepancy, tax evasion, or intent to evade tax was established, proceedings for goods movement could not rest solely on the absence of an e-way bill.
Issues: (i) Whether compulsory generation and carriage of an e-way bill under Rule 138 applied to inter-State movement on 24 November 2017; (ii) Whether detention, seizure and penalty for non-production of an e-way bill were sustainable on that date.
Issue (i): Whether compulsory generation and carriage of an e-way bill under Rule 138 applied to inter-State movement on 24 November 2017.
Analysis: Rule 138 was substituted by Notification No. 27/2017-Central Tax dated 30.08.2017, but its compulsory operational date for e-way bill compliance was subsequently notified. The nationwide mandatory requirement was brought into force from 1 April 2018, which was after the interception on 24 November 2017.
Conclusion: No; compulsory e-way bill compliance under Rule 138 did not apply on 24 November 2017. The issue was decided in favour of the assessee and against the Revenue.
Issue (ii): Whether detention, seizure and penalty for non-production of an e-way bill were sustainable on that date.
Analysis: The goods corresponded with the tax invoice and transport documents, and no discrepancy was found in their quantity, weight or description. The buyer and seller were bona fide dealers, the vehicle was on its designated route, and no material established tax evasion or an intention to evade tax. Since the mandatory e-way bill requirement was not in force on the relevant date, proceedings under Sections 129 and 122 could not rest on its non-production.
Conclusion: No; detention, seizure and penalty for non-production of an e-way bill on that date were unsustainable. The issue was decided in favour of the assessee and against the Revenue.
Final Conclusion: Non-production of an e-way bill before Rule 138 became compulsory could not constitute a breach supporting detention or penal action where the accompanying transaction documents were genuine and no tax-evasion intent was shown.
Ratio Decidendi: Detention and penalty for failure to carry an e-way bill cannot be sustained where the compulsory requirement under Rule 138 had not come into force on the date of movement and no tax evasion is established.