Facts of the Case:

In this case, the taxpayer preferred a second appeal under Section 112(1) of the CGST/UPGST Act, 2017 against the order dated 07.11.2023, whereby the first appellate authority upheld the penalty imposed under Section 129.

On 03.08.2022, the Mobile Squad intercepted vehicle carrying electrical equipment dispatched by M/s Havells India Ltd., Alwar to the appellant at Agra against tax invoice dated 30.07.2022. The goods were accompanied by an e-way bill dated 31.07.2022. However, at the time of interception, the e-way bill had already expired and, significantly, it mentioned vehicle No. RJ-02-GA-6429, whereas the goods were actually being transported in a vehicle bearing a different registration number, HR-47-E-3811.

The proper officer treated the expired e-way bill as non-compliance and imposed penalty. The appellant paid the penalty and secured release of the goods, contending in appeal that the lapse was merely procedural and that the tax invoice, bilty and e-way bill were otherwise available. It was also contended that the transporter had failed to update the vehicle number when the goods were allegedly transhipped.

Issue:

Whether the interception of goods with an expired e-way bill, bearing a vehicle number entirely different from the vehicle actually transporting the goods, constituted a violation of Section 68 read with Section 129 and Rule 138? Whether such lapse could be treated as a mere technical/procedural error in the absence of direct evidence of intention to evade tax?

Held That:

The Tribunal observed that Rule 138(3), Explanation 2 makes it clear that an e-way bill is not valid for movement of goods unless Part-B contains the requisite vehicle details. The CBIC’s relaxation under Circular No. 64/38/2018-GST concerning minor errors in vehicle numbers could not be extended to a case where the e-way bill contained an entirely different vehicle registration number from the vehicle in which the goods were actually found.

The Tribunal further noted that the e-way bill was valid only up to 01.08.2022, whereas the goods were intercepted on 03.08.2022. The distance declared between Alwar and Agra was only 167 km, yet the goods were still in transit after expiry of the e-way bill. The taxpayer’s explanation that the vehicle had been taken to Gurgaon for transhipment was also found unconvincing, particularly since Gurgaon was substantially away from the declared route.

Significantly, the Tribunal held that the issue was not confined to an expired e-way bill. The combination of an expired e-way bill and a completely different vehicle number constituted circumstances from which an intention to evade tax could be inferred. The taxpayer had also failed to furnish a timely reply to the SCN or produce credible evidence explaining the discrepancies and establishing bona fide conduct.

Relying upon B.M. Computers and Jhansi Enterprises, the Tribunal held that an incomplete/incorrect e-way bill can attract proceedings under Section 129. It further referred to Union of India v. Dharmendra Textile Processors, observing that statutory penalties under fiscal enactments constitute civil liability and mens rea is not necessarily an essential ingredient unless the statute specifically requires it. Nevertheless, the Tribunal recognised that, in the context of Section 129, intention to evade tax may be gathered from the facts and surrounding circumstances.

Applying these principles, the Tribunal held that the Department had established a rebuttable presumption of intention to evade tax, arising particularly from the fact that the e-way bill contained a vehicle number wholly different from the vehicle actually carrying the goods and had also expired before interception. The appellant failed to rebut this presumption by credible evidence.

Accordingly, the Tribunal found no legal or factual infirmity in the orders of the lower authorities and dismissed the second appeal.

Keytakeaways 

A mere expiry of an e-way bill may not, by itself, conclusively establish an intention to evade tax. However, where the expired e-way bill also bears a completely different vehicle number, the discrepancy goes beyond a minor clerical error covered by CBIC Circular No. 64/38/2018-GST. Such circumstances can support a rebuttable presumption of intention to evade tax, and failure of the taxpayer to satisfactorily explain the discrepancy may sustain proceedings under Section 129. The CBIC relaxation for minor vehicle-number errors cannot be invoked where the vehicle number in the e-way bill is substantially and entirely different from the vehicle actually carrying the goods.

Case name: Anand Enterprises v. Ruby Singh, Additional Commissioner dated 25.09.2026

Citation No. 2026 Taxo.online 3047