Proceedings based on presumptions are void ab initio.

Case Title: S.R. Sales v. State of U.P.

Court: High Court of Allahabad

Petition No.: Writ Tax No. 1658 of 2018

Category: Detention of Goods and Imposition of Penalty

Date of Judgement: 02 February 2023

Relevant Section: Section 129(3), U.P. GST Act, 2017; Rule 48, U.P. GST Rules, 2017

Facts of the Case

1. The petitioner (S.R. Sales), as consignee, arranged transportation of goods from Birur, Karnataka to Kanpur, U.P. via transporter, with e-way bill generated on 10.10.2018 (Para 3).
2. Goods were shifted between trucks at Amrawati and Nagpur—ultimately, Truck No. U.P.-78CN/4605 was intercepted at Lakhanpur, Kanpur on 22.10.2018 (Para 3).
3. Authorities presumed that another truck (U.P.-78DT/6036) had already brought the goods into U.P., and this was a second consignment, leading to penalty under Section 129(3) (Para 4).
4. The penalty was upheld by the first appellate authority (order dated 10.12.2018), prompting this writ petition (Para 2).

Question(s) in Consideration

• Whether the authorities were justified in imposing penalty based on the presumption that the same goods were brought twice into the State using different trucks? (Para 7)
• Whether the presence of required documents including a valid e-way bill invalidates the presumption of a second import of the same goods? (Para 9)

Observations of the Court

1. The penalty order was based entirely on presumption that the goods were transported twice using the same e-way bill, without corroborative material (Para 7).
2. The e-way bill (No. 161073493422) carried in the truck at the time of interception was valid and accompanied by all required documents (Para 8).
3. The authorities failed to prove that the truck U.P.-78DT/6036 ever brought the goods into the State, as there was no substantive evidence to support that claim (Para 8).
4. The argument of the Standing Counsel based on Rule 48 and the duplicate invoice was rejected due to lack of supporting evidence (Para 9).

Judgement of the Court

1. The High Court held that both the penalty and appellate orders (dated 02.11.2018 and 10.12.2018) were unsustainable and set them aside (Para 10).
2. The writ petition was allowed, and the penalty amount already deposited was ordered to be refunded within 15 days (Paras 11–12).

Between Fine Lines

• Transporting goods through multiple vehicles with a valid e-way bill does not automatically imply tax evasion.
• Penalty under Section 129(3) requires concrete evidence—not assumptions or presumptions.
• Mere change of vehicles during transit, when properly documented, is not a violation.
• E-way bill legitimacy nullifies suspicion unless contrary proof is available.
• Judicial review protects transporters from arbitrary imposition of penalties under GST law.

Summary of Referred Cases