GST Cannot Be Demanded on E-way Bill Values Alone; Job Worker Taxable Only on Job Charges, Section 73 Demand Quashed: GSTAT Chandigarh

1. Title of the Case

2. Summary of the Judgment

Facts of the Case: Mittal Cutters & Allied Works (P) Ltd., Chandigarh, undertakes job work of cutting HR sheets for principal manufacturers. On the basis of DGARM data, a show cause notice dated 28.11.2024 alleged that the tax liability on e-way bills for 2020-21 was Rs. 38,03,254 against Rs. 1,10,069 paid in GSTR-3B. A demand of Rs. 36,93,185 under Section 73, with interest and a penalty of Rs. 3,69,319, was confirmed on the footing that 24 e-way bills were not disclosed in GSTR-1, and the first appeal was rejected (paras 3 to 6).

Issues for Determination: Whether GST of Rs. 36,93,185 was payable on the value of goods shown in the e-way bills, and if so, whether interest and penalty followed (para 9).

Findings and Observations of the Court: The Tribunal examined a sample document trail: the principal’s delivery challan dated 07.01.2021 marked ‘for job work only, not for sale’; the principal’s e-way bills for ‘Outward – Job Work’ and ‘Inward – Job Work Returns’ for the same value of Rs. 13,48,370; the transporter’s consignment note; and the appellant’s invoice of Rs. 16,842 for job charges (para 15). It held that the Appellate Authority erred in treating the e-way bill as one that only a registered job worker could generate; under Rule 138 the person who causes the movement may generate it, and who generated it is of little relevance so long as consignor and consignee are correctly declared (paras 16 to 18). Crucially, the notice rested only on the DGARM mismatch, without any investigation or evidence that the appellant had supplied the goods (paras 19 to 21).

Verdict and Basis of the Judgment: Holding that, absent other evidence of evasion, tax cannot be demanded merely on the value of goods declared in e-way bills, the Tribunal set aside the demand, interest and penalty and allowed the appeal (paras 22 and 23).

Analysis of the Judgment: The ruling confirms that an e-way bill is a movement document, not proof of taxable supply. For a job worker, the taxable value is the job charge; the principal’s goods do not become the job worker’s turnover. The appellant had also shown that, for 2021-22, the Department accepted an identical explanation in Form ASMT-12, though the Tribunal decided the appeal on the evidentiary point (para 8).

Legal Takeaway: Analytics-based mismatches between e-way bills and returns may trigger an enquiry, but cannot by themselves sustain a Section 73 demand. Job workers should preserve delivery challans, consignment notes and job-charge invoices to establish the trail.

3. Tabular Summary

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