The Allahabad High Court has ruled that the mere absence of an e-tax invoice due to a technical glitch in the Goods and Services Tax (GST) portal does not amount to tax evasion if all other transit documents are in place.
The judgment comes in response to a writ petition filed by M/s Agarwal Steels (Agarwal Steels) against orders passed by the Additional Commissioner, Grade-2, Saharanpur, and the Assistant Commissioner, Sector-2, Mobile Squad-1, Saharanpur, detaining the Petitioner’s goods on the sole ground that the e-tax invoice was missing at the time of interception.
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Agarwal Steels is an iron scrap supplier who had participated in an e-auction conducted by the Northern Railway on February 19, 2024, where they secured a bid for 110.138 metric tonnes of iron scrap for which requisite invoice was issued by the Ministry of Railway, on which Central GST, State GST and Tax Deducted at Source (TDS) were also paid by the petitioner.
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A release order for the consignment was also issued on the same date. On March 4, 2024, the Northern Railway issued a sale note specifying that the scrap was to be lifted from Bijnor, Uttar Pradesh. Subsequently, Agarwal Steels generated a tax invoice on the same day for the sale of 5,831 kgs of iron scrap to M/s Swastik Steel Traders, Punjab, and arranged for transportation via road.
The transportation vehicle was intercepted at Devband, Saharanpur, where officials found no discrepancies in the goods but detained them solely due to the absence of an e-tax invoice. Proceedings were initiated against the Petitioner under Section 129 of the GST Act but the goods were released upon the payment of tax and penalty.
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Suyash Agarwal appearing for Agarwal Steels reiterated that the inability to adduce E-Tax Invoice was due to a glitch in the GST Portal and referred to a notification dated 14.09.2018 issued by the Ministry of Finance which clarified that the “that if the consignment of goods is accompanied with an invoice or any other specified documents, the proceedings under section 129 of the GST Act may not be initiated.”
He further asserted that the authorities had not recorded any intent to evade tax and that the e-invoice was submitted before the seizure order was passed relying on the decision of the Allahabad High Court in Shyam Sel & Power Limited Vs. State of U.P. & Others (2023) and Galaxy Enterprises Vs. State of U.P. & Others (2023) which held that deficiencies cured before detention do not justify penalties.
The Bench of Justice Piyush Agrawal noted that the consignment was accompanied by all necessary documents such tax invoice, e-way bill, and bilty without any discrepancies in goods or quantity.
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The only basis for seizure and penalty was the missing e-tax invoice, which was due to a technical glitch. The Court observed that none of the authorities had found any intent of tax evasion by the petitioner. Furthermore, since the e-tax invoice was later produced and the authorities had not disputed its authenticity, the penalty imposed was unwarranted.
Consequently, the Bench quashed both the impugned orders while directing the authorities to refund the amount deposited by the petitioner within two months from the submission of a certified copy of the order.
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