It was ruled by Allahabad High Court that the only absence of an e-tax invoice as of the technical issue in the Goods and Services Tax (GST) portal does not direct to tax evasion if all the other transit documents are in place.
The ruling was issued in response to a writ petition filed by M/s Agarwal Steels, challenging orders from the Additional Commissioner, Grade-2, Saharanpur, and the Assistant Commissioner, Sector-2, Mobile Squad-1, Saharanpur. The authorities had detained the company’s goods solely because the e-tax invoice was missing at the time of interception.
Agarwal Steels, an iron scrap supplier, participated in an e-auction conducted by Northern Railway on February 19, 2024. They successfully secured a bid for 110.138 metric tonnes of iron scrap, for which the Ministry of Railways issued the requisite invoice. The applicant duly paid Central GST, State GST, and Tax Deducted at Source (TDS) on this transaction.
On the same date, a release order for the consignment was too issued. The Northern Railway on March 4 2024 furnished a note citing that the scrap was to be lifted from Bijnor, Uttar Pradesh.
On the same day, Agarwal Steels issued a tax invoice for the sale of 5,831 kilograms of iron scrap to M/s Swastik Steel Traders in Punjab and arranged for its transportation by road.
The vehicle was intercepted at Devband, Saharanpur, where officials found no discrepancies in the goods but detained them solely due to the absence of an e-tax invoice. Proceedings were initiated against the petitioner under Section 129 of the GST Act; however, the goods were released upon payment of tax and penalty.
It was repeated by Suyash Agarwal appearing for Agarwal Steels that the inability to adduce an e-tax invoice was due to the glitch in the GST portal and referred to a notification on 14.09.2018 issued by the Ministry of Finance which explained that “if the consignment of goods is accompanied with an invoice or any other specified documents, the proceedings under section 129 of the GST Act may not be initiated.”
He further argued that the e-invoice was provided before the seizure order, citing the Allahabad High Court’s ruling in Shyam Sel & Power Limited Vs. State of U.P. & Others (2023) and Galaxy Enterprises Vs. State of U.P. & Others (2023), which held that deficiencies fixed before detention do not justify penalties and that the authorities had not documented any intention to evade the tax.
Also Read: Allahabad HC: GST Invoice and E-way Bill Generation After Detention Can’t Save from Penalty
The Bench of Justice Piyush Agrawal observed that the consignment was accompanied by all necessary documents, including a tax invoice, an e-way bill, and a bilty, without any discrepancies in the goods or their quantity.
The sole reason for the seizure and penalty was the absence of an e-tax invoice, which was attributed to a technical glitch. The Court noted that none of the authorities discovered any evidence of intent to evade taxes by the petitioner.
Additionally, since the e-tax invoice was later provided and its authenticity was not disputed by the authorities, the penalty imposed was deemed unjustified.
Read Also: All About GST E-Invoice Generation System on Portal with Applicability
Therefore the bench quashed both the impugned orders while asking the authorities to refund the amount deposited via the applicant within two months from the certified copy of the order submission.
| Case Title | M/s Agarwal Steels vs. Additional Commissioner Grade 2 And Another |
| Citation | WRIT TAX No. – 884 of 2024 |
| Date | 17.02.2025 |
| Counsel for Petitioner | Suyash Agarwal |
| Counsel for Respondent | C.S.C. |
| Allahabad High Court | Read Order |
