TaxTMI 
TaxTMI 
2026 (10) TMI 75
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.... The brief facts of the case are that the Assistant Commissioner, State Tax, Mirzapur, Mobile Squad, Unit-II, on the basis of specific information, started road checking on 28.12.2022 near Purjagir in Mirzapur District. During the course of checking, a vehicle bearing No. UP 66 T 1869 was stopped and it was inspected by the Mobile Squad Officer on 28.12.2022 at 12:05 Hours (12:05 PM). Upon inspection, the officer found that the said vehicle was loaded with taxable goods - copper scrap. When the driver / person-in-charge of the vehicle was asked for the documents regarding the goods loaded in his vehicle, the driver Mr. Naushad Alam told that he is not in possession of any documents viz. Bill, Bilty, EWB etc. The driver Mr. Naushad Alam told the officer that the goods were loaded from a place near City Kotwali and he was asked to transport the goods up to Ghosia, Aurai in District Bhadohi. Thereafter, he will be directed about the exact place of unloading the said goods. The Mobile Squad Officer intercepted the vehicle and directed the driver to park the said vehicle in his office campus in Mirzapur. After physical verification on 28.12.2022, it was ascertained by the M.S. Officer t....
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.... CIN SBIN22120900516915, reflected in liability ledger (Ref. No. DC0912220390665) against Demand ID ZD091222095035I, under compulsion for release of goods. It is settled law that penalty cannot be imposed mechanically. In Hindustan Steel Ltd. and Satyam Shivam Papers Pvt. Ltd., the Hon'ble Supreme Court held that procedural lapses without intent to evade tax do not justify penalty. Hence, the impugned order is liable to be set aside and penalty refunded. The outward supplies declared in GSTR-1 are fully reconciled with GSTR-3B, and the applicable tax has been duly paid. Hence, there is no discrepancy or suppression of turnover. b) Prayer: It is respectfully prayed that the impugned order dated 29.12.2022 be set aside and it be held that the lapse was purely procedural, as the vehicle was temporarily parked due to movement restrictions (no entry before 9:00 PM) and documents were in the process of being arranged. The transaction being genuine and no tax evasion involved, the penalty is unsustainable. The amount of Rs.2,13,010/- deposited on 29.12.2022 be refunded to the appellant along with any other relief deemed fit in the interest of justice. 4. The appea....
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....nd the penalty should not be sustained merely on the ground of delay. (ii). If the appellant had any intention to conceal the goods or evade tax, the appellant would not have generated the e-way bill on the same day and would not have voluntarily submitted the documents and written explanation before the department through his representative on the very next day. This conduct shows immediate compliance after delay, and not tax evasion. (iii). It is also clear from the departmental record that during verification, 978 kg Copper Scrap was found and the notice itself records that the goods found were as per the invoice produced. Therefore, the goods were not different, there was no shortage or excess in quantity, and no hidden / extra goods were found. (iv). In the DRC-07 / order, the issue is mentioned only as "Bill and e-way bill present after vehicle detained". In the goods details, HSN 7404, Copper Scrap, quantity 978 kg, value Rs.5,91,690 is recorded. On this basis, penalty of Rs.2,13,010/- has been imposed. Legal Submission / Judicial Decisions: (i). It is respectfully submitted by the appellant that while imposing penalty under Secti....
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....rd, it is clear that the goods were genuine, the same goods were found, the quantity was the same, the e-way bill was generated on the same day, and the same was produced before the department on the next day. Therefore, this is not a case of tax evasion, but a case of documentary delay arising due to circumstances. 5. On behalf of the Respondent / Department, Mr. Manav Kumar Vikas, learned Deputy Commissioner/Authorised Representative & Mr. Yogendra Kumar Learned Assistant Commissioner/ Authorised Representative, appeared and made their oral submission that the appellant has clearly violated the provisions of UPGST/CGST Act & Rules, Section 31, Rule 46, Rule 138 & 138A. Arguments of Authorized Representative: 6. Countering the reasons given by appellant, learned Authorised Representative argued that: (i). Appellant's statements before aforementioned authorities at all stages of proceedings are different, contradictory and misleading. (ii). Vehicle was intercepted in transit not when it was parked. (iii). Vehicle was intercepted on 28-12-2022 at 12:05 PM, whereas E-way bill was generated at 7:26 PM and not before interception. (iv). Had ....
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.... to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, (a). on payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty; (b). on payment of the penalty equal to the fifty per cent of the value of the goods or two hundred percent of the tax payable on such goods whichever is higher, and in case of exempted goods, on payment of an amount equal to five percent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty; (c). upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (3). The proper officer detain....
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....tion Device embedded on to the conveyance in such manner as may be notified by the Commissioner. ..." "Verification of documents and conveyances- Rule 138B. (1) The Commissioner or an officer empowered by him in this behalf may authorise the proper officer to intercept any conveyance to verify the e-way bill in physical or electronic form for all inter-State and intra-State movements of goods. (2) The Commissioner shall get Radio Frequency Identification Device readers installed at places where the verification of movement of goods is required to be carried out and verification of movement of vehicles shall be done through such device readers where the e-way bill has been mapped with the said device. (3) The physical verification of conveyances shall be carried out by the proper officer as authorised by the Commissioner or an officer empowered by him in this behalf: Provided that on receipt of specific information on evasion of tax, physical verification of a specific conveyance can also be carried out by any officer after obtaining necessary approval of the Commissioner or an officer authorised by him in this behalf." 10. Ru....
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....cument number (Goods Receipt Number or Railway Receipt Number or Airway Bill Number or Bill of Lading Number) and reasons for transportation; and Part B comprising of transporter details (Vehicle number). As per Rule 138 of the CGST Rules, 2017, every registered person who causes movement of goods (which may not necessarily be on account of supply) of consignment value more than Rs. 50000/- is required to furnish above mentioned information in part A of e-way bill. The part B containing transport details helps in generation of e-way bill. 16. The sole reason why the E-way Bill mechanism was introduced under the new GST regime was to ensure that goods being transported comply with the GST Law and that would also serve as an effective tool to track movement of goods and check tax evasion. It is important to note that the compliance is to be done before the goods are moved and not after its interception. 17. It would be apposite to take into account a situation where the vehicle was not intercepted and the conveyance moved forward without being stopped by the proper officer to its destination. In such a situation, there would be no record of such goods being transported from Poi....
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....penalty is not proper and justified. But there must be some reasonable grounds to show that there was actually no intention to evade tax on the part of tax payer. 8. In the present case, it is an admitted fact that neither invoice nor e-way bill were accompanying the goods when it was intercepted by the authorities. This contravention of rules can not be treated as a mere common mistake. In this situation, burden of proof for establishing that there was no intention to evade tax shifts to the assessee. 9. This court in case of M/s Akhilesh Traders V. State of U.P. and 3 others (Writ Tax no. 1109 of 2019 decided on February 20, 2024) has held that in cases where the goods are not accompanied by the invoice and e-way bill, a presumption may be raised that there is an intention to evade tax. The relevant paragraphs of the aforesaid judgment read as under: '7. This Court in umpteen cases where penalties were being imposed under Section 129 of the Act though held that an intention to evade tax should be present, however, in the event the goods are not accompanied by the invoice or the e-way bill, a presumption may be raised that there is an intention to evade ....