Background

On 08.03.2018 a vehicle carrying iron scrap worth Rs. 83,323 under a tax invoice, but without an e-way bill, was intercepted by the Mobile Squad, Bareilly, and tax and penalty of Rs. 30,000 were imposed under Section 129(3). The First Appellate Authority set this aside because the e-way bill was produced later with the reply. Revenue appealed, and the question of movement without an e-way bill under Rule 138(1) was referred to the Division Bench. The respondent did not appear.

Final Verdict

The Tribunal held that carrying an e-way bill is mandatory under Rule 138(1) and that the e-way bill is an integral part of the statutory mechanism for monitoring movement of taxable goods. It distinguished the precedents relied upon by the First Appellate Authority (Singh Tyre, Harle Foods, Modern Traders, Raj Iron, Rai Prexim) on the reasoning that the e-way bill is an online, time-stamped record whereas the invoice is issued manually, so non-generation of an e-way bill leaves scope to manipulate the books, and such a transaction establishes an intention to evade tax. The movement of sensitive goods (iron scrap) from Baheri (UP) to Kichha (Uttarakhand), about 25 km apart, was held to reinforce that intent, which the Tribunal found “crystal clear”. The First Appellate Authority was held to have erred, its order was quashed, and the Section 129(3) order of tax and penalty was restored, allowing Revenue’s appeal.