TaxTMI 
TaxTMI 
2026 (8) TMI 1790
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....ransportation, the SGST Officer, Mobile Squad Unit No. 3, Kanpur, checked the vehicle at 01:27 p.m. at Jhakarkatti, Kanpur, and also scanned the E-Way Bills through the E-Way Bill Scan App. After about 08.30 hours, at 09:52 p.m., the Mobile Squad again checked the vehicle at Jhakarkatti. On this ground, the officer of the Mobile Squad drew the inference that the papers were being reused for another transaction to evade tax. On the basis of the above discrepancy, the Mobile Squad Officer intercepted the vehicle and issued a notice under Section 129. After rejecting the reply of the owner of the goods and fixing the valuation at Rs. 2,65,650.00, a total demand of Rs. 6,06,844.00 was created (Penalty of Rs. 74,382.00 and Cess penalty of Rs. 4,58,080.00). Being aggrieved by the said order, the appellant preferred an appeal before the Appellate Authority, i.e., Additional Commissioner, Grade-II (Appeal), 4th, State Tax, Kanpur, dated 11.10.2023. The First Appellate Authority rejected the appeal and confirmed the order passed by the Assistant Commissioner, Mobile Squad, State Tax, 10th Unit, Kanpur. The First Appellate Authority mentioned in his observation that, in the present cas....
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..... 5. That in this connection, it was submitted in the reply to the officer of the Mobile Squad that when the vehicle moved from Jhakarkatti to Cooperganj over the bridge, the vehicle got damaged and could not move, and after the vehicle was repaired, the driver started for the destination and the same was detained at 9:52 p.m. while it was proceeding towards the destination. 6. That as the goods were checked at Jhakarkatti earlier and the E-Way Bill was verified, and the same vehicle was checked again at Cooperganj, it was detained on the allegation that the goods were being re-transported, which was nothing but a presumption. The repairing bill of the vehicle was enclosed in support, along with the reply submitted before the officer of the MS, but no cognizance thereof was taken, though it formed part of the reply of the appellant before him. 7. That, as such, the allegation of re-transportation with the same documents was a wrong fact, based on presumption only. The applicant had also submitted an affidavit of the driver in support before the officer of the Mobile Squad, which was also not taken into consideration, and only on the basis that the E-Way Bill was earlier ve....
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....d not been doubted. The E-Way Bill was within the period of validity. There was no iota of evidence that the applicant had contravened any provision of the Act. 16. That the only ground of re-transportation was based on presumption, and ignoring the evidence submitted, there was no mala fide on the part of the appellant, and the goods were sold in the regular course of business. 17. That the officer of the Mobile Squad did not agree with the above submission, and the goods were seized with the vehicle, and the applicant was asked to deposit the sum of Rs. 6,06,844.00 as penalty on the sale value of the bill. As the goods were perishable in nature, the same were got released by depositing the amount of penalty demanded, and the same is the matter of dispute in the present appeal. 18. That the version of the officer of the Mobile Squad was based on imagination, presumption and surmises. The Hon'ble Supreme Court and Hon'ble High Court, in the following cases, besides others, have held that suspicion, however strong it may be, cannot take the place of evidence on record. 18.1. In the case of Umacharan Shaw & Bros. vs. CIT (1959) 37 ITR 271 (SC), it was held that it is sett....
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....he vehicle, disclosing the necessary information. In view of the aforesaid facts, the Court found no irregularity in the present transaction and, therefore, the seizure order as well as penalty notice issued under Sections 129(1) and 129(3) of the Act, as well as the consequential proceedings, were set aside. The goods were released forthwith in favour of the petitioner." 23. That in the case of the appellant, the E-Way Bill had been downloaded before the time of movement of the goods and before inspection/detention of the vehicle, and there was no evidence of misuse. The same was valid at the time of detention, and the goods were according to the bill. As such, the penalty imposed was liable to be set aside. 24. That in the case of the applicant, the goods were according to the bill and had been sent by the appellant on the proper bill. As such, the detention and deposit of security/penalty amount in the shape of an indemnity bond were bad in law and on facts and were liable to be set aside. 25. That the allegations made in the show cause notice and in the order passed were based on presumptions and surmises. There was no evidence on record that the E-Way Bill had been re....
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.... in the case of M/s B.L. Agro. Oils Ltd., Bareilly, held in paragraph No. 5 that "It is for the seizing authority to establish by evidence that the e-way bill is being reused. In the present case, there is no evidence produced by the seizing authority that there is a reuse of the e-way bill by the petitioner." 8. The same finding was given by the Hon'ble Allahabad High Court in the case of M/s Anandeshwar Traders vs. State of U.P. and Others, wherein it was held that "if there is no evidence of the use of the E-Way Bill, the penalty cannot be imposed." In the case of M/s Anandeshwar Traders vs. State of U.P. and Others, reported in 2021 U.P.T.C. [Vol. 107]-421, paragraphs 10 and 11 of the said judgment read as follows: "10. Even if the dealer does not cancel the e-way bill within 24 hours of its generation, it would remain a matter of inquiry to determine on evidence whether an actual transaction had taken place or not. That would be subject to evidence received by the authority. As such, it was open to the seizing authority to make all factual inquiries and ascertain on that basis whether the goods had or had not been transported pursuant to the e-way bills generated o....
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..... Ltd. & Anr., SLP (C) No. 21132/2021, decided on 12.01.2022. "The Hon'ble Supreme Court declined to interfere with the well-reasoned judgment of the Telangana High Court, which had found that no fault or intent to evade tax could be inferred merely from the circumstances relied upon by the revenue." In the case of M/s Shri Surya Traders vs. Union of India, decided on 06.01.2022, the Hon'ble High Court of Allahabad held that- "if the movement of the goods is in compliance with the provisions of the GST Act, the same cannot be detained on the basis of presumptions and assumptions." In the case of State of Kerala vs. M.M. Mathew, reported in 1978 STC (42) 848, it was held that presumption cannot take the place of evidence-It has been held by the Hon'ble Supreme Court that strong suspicion, strange coincidences and grave doubt cannot take the place of legal proof. In the case of M/s Anandeshwar Traders vs. State of U.P. [2021 U.P.T.C. (Vol-107)-421], tax and penalty were imposed on the petitioner on the allegation of reuse of the E-Way Bill. In the appeal filed by the assessee, the appellate authority admitted additional evidence at the behest of the revenue....