GST does not Mandate Toll Plaza Receipts to Prove Movement of Goods: Allahabad HC says E-waybill and Invoices sufficient [Read Order]

The Allahabad High Court has ruled that GST ( Goods and Services Tax ) does not mandate toll plaza receipts to prove the movement of goods. The court says such documents are not relevant when E-way bills and invoices are produced.

Raghuvansh Agro Farms Ltd filed a petition against the GST order passed under Section 74 of GST Act. The petitioner is a registered dealer engaged in trading of agricultural goods and areca nuts, pursuant to a survey conducted in January 2019.

According to the submissions, the notice was issued under Section 74 based on a survey. The GST department alleged that the petitioner was engaged in circular trading and wrongful availment of input tax credit.

The same allegation was made on the ground that the petitioner failed to produce toll plaza receipts and weighbridge slips to prove actual movement of goods.

Despite the petitioner furnishing tax invoices, e-way bills, transport bilties, GSTR-1, GSTR-2A, GSTR-3B returns and bank statements evidencing payment to suppliers and transporters, the adjudicating authority confirmed tax, interest and penalty.

Before the high court, the petitioner submitted that all transactions were recorded in GST returns, payments were routed through banking channels, and movement of goods was supported by valid e-way bills and transport documents.

The petitioner, with regards to the cross empowerment submitted that no recommendation of GST council for issuing notification of cross empowerment. Therefore, in the absence of any recommendation of the GST council, the whole proceeding initiated under UP GST is without jurisdiction.

The State, on the other hand, defended the orders by alleging absence of physical movement of goods. The department again stressed on the petitioner’s failure to produce toll receipts as corroborative evidence.

The high court heard the submissions. After examining the same, the court observed that proceedings under the Section 74 cannot be invoked without clear proof fraud, wilful misstatement or suppression of facts with intent to evade tax.

According to the court, all the ingredients relevant for Section 74 are not present in the SCN and the final orders.

With regards to the non-submission of toll plaza receipts, Justice Piyush Agarwal said that the department failed to state the provision which mandates the petitioner to produce toll plaza receipts to prove transportation of goods.

The court acknowledged the submission of the e-way bills, tax invoices, bilties and transporter payment ledgers, none of which were found to be defective or fabricated.

Accordingly, the high court quashed the orders and allowed the petition.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates