Post-detention E-way bill generation fails to cure non-compliance; penalty upheld

Issue

Whether the generation of an E-way bill minutes after the interception of a vehicle cures the defect of non-compliance under Section 129, and if such subsequent generation protects the assessee from penalty.

Facts

Transport Details: The petitioner was transporting goods within Kanpur under Tax Invoice Nos. 76 and 77 on July 4, 2023.
The Interception: The vehicle was intercepted by the Revenue authorities at 22:16 hours on 04.07.2023.
The Defect: At the time of interception, the goods were not accompanied by a valid E-way bill.
Subsequent Action: The petitioner generated the E-way bill at 22:20 hours on the same day (i.e., 4 minutes after interception).
Penalty Order: A penalty order was passed on 05.07.2023 for the movement of goods without an E-way bill.
Petitioner’s Defense: The petitioner argued that the defect was cured because the E-way bill was generated and produced before the penalty order was physically passed. They relied on the precedent of Axpress Logistics India Pvt. Ltd.

Decision

Chronology is Crucial: The Court noted the undisputed timeline: Interception occurred at 22:16 hours, while the E-way bill was generated at 22:20 hours. Therefore, the document did not exist at the moment of detention.
Defect Not Cured: The Court ruled that generating an E-way bill after detention does not cure the initial illegality. Accepting such a practice would provide a “handle” to tax evaders (who would only generate bills if caught) and frustrate the entire E-way bill regime.
Precedent Distinguished: The reliance on Axpress Logistics was rejected. The Court clarified that in Axpress, the E-way bill had been generated prior to the detention, whereas in the present case, it was generated post-detention.
Ruling: The writ petition was dismissed as meritless, and the penalty was upheld in favor of the Revenue.

Key Takeaways

The “Time of Interception” Rule: Compliance is measured strictly at the moment of interception. If the E-way bill is not present then, generating it even minutes later is legally futile for avoiding Section 129 penalties.

Purpose of Law: Courts will not interpret laws in a way that encourages “chance-taking” (i.e., moving goods without bills and generating them only if stopped).

Distinguishing Precedents: It is vital to verify the factual matrix of cited case laws. A precedent regarding a bill generated before detention cannot save a case where the bill was generated after detention.

HIGH COURT OF ALLAHABAD

Aysha Builders and Suppliers

State of U.P.

Arun Bhansali, CJ.
and Vikas Budhwar, J.

WRIT TAX No. 2415 of 2024

JANUARY 24, 2025

Akhil Agnihotri for the Petitioner. Ankur Agarwal, S.C. for the Respondent.

ORDER

1. This writ petition has been filed by the petitioner aggrieved of the order dated 05.07.2023, whereby a penalty of Rs. 75,600/- has been imposed.

2. The facts as disclosed from the petition are that the goods in question with the tax invoice Nos. 76 and 77 by the petitioner were loaded in truck No. UP 78 DN 5211 from Harjinder Nagar, Kanpur to Panki, Kanpur. When the vehicle was in movement towards its destination, the same was intercepted by respondent no. 2 at Kanpur on 04.07.2023 at 22.16 hours.

3. A notice was issued to the petitioner inter alia on the ground that the vehicle in question was not carrying the e-way bill.

4. The plea raised is that at the time when the vehicle started, the server was down and, subsequently, the e-way bill was generated on 04.07.2023 at 10:20 PM. Based on the said submissions, it is sought to be contended in the present writ petition that as the petitioner has produced the e-way bill before the order dated 05.07.2023 has been passed by the authority, for non-production of e-way bill, the penalty cannot be imposed. Reliance has been placed upon Axpress Logistics India (P.) Ltd. v. Union of India GSTL 794/56 GSTR 433 (Allahabad)/Writ Tax No. 602 of 2018, decided on 09.04.2018.

5. Counsel for the respondents submitted that the vehicle in question was detained at 10.16 hours and, admittedly, the e-way bill has been generated after the detention and as such, the plea sought to be raised pertaining to producing the e-way bill, is of no consequences as the same has been generated only on account of the fact that the vehicle was detained and, therefore, the petition deserves dismissal. Further submissions have been made that the penalty has been deposited long back and the petition after 1½ years has been filed by way of an afterthought.

6. We have considered the submissions made by counsel for the parties and have perused the material available on record.

7. The averments in the petition in para-11 are very specific inter alia indicating that the goods and vehicle during its movement to its destination were intercepted by respondent no. 2 at Kanpur on 04.07.2023 at 22.16 hours. A look at the e-way bill, produced as annexure-4, clearly reflects that the same has been generated at 10:20 PM. Apparently, once the vehicle without the requisite eway bill was detained, immediately, the e-way bill has been generated by the petitioner. The claim made that as the same has been generated before passing of the order on 05.07.2023, i.e., next date and, therefore, it cannot be said that there has been any deficiency and no penalty can be imposed, cannot be countenanced. If the plea raised in this regard is accepted, the same would provide a handle to the assesses to generate the e-way bills only in cases where the vehicles are detained and then produce the same before the authority before the notice is issued frustrating the very purpose.

8. So far as reliance placed on judgment in Axpress Logistics India Pvt. Ltd. (supra) is concerned, the said case, apparently, has no application, inasmuch as in the said case, the Court has noticed that the e-way bill under the U.P. GST Act was downloaded by the petitioner therein much before the detention and seizure of the goods and the vehicle and in the present case, admittedly, the eway bill has been downloaded post detention and seizure of the goods and the vehicle.

9. Consequently, there is no substance in the writ petition. The same is, therefore, dismissed.