Introduction
In a significant ruling, the Allahabad High Court has clarified that under Section 129 of the GST Act, the burden to prove the actual movement of goods lies on the assessee in summary proceedings. This decision reinforces the requirement for businesses to maintain proper documentation and transparency in GST compliance.
Key Highlights of the Ruling
Justice Piyush Agrawal, in M/S Jaya Traders v. Additional Commissioner Grade-2, ruled that:
- Assessee must provide cogent material evidence to prove the movement of goods.
- Authorities can seize goods if transportation is in contravention of GST provisions.
- Undervaluation of goods can be a valid ground for detention.
The ruling follows the principles set in State of Karnataka Vs. M/s Ecom Gill Coffee Trading Pvt. Ltd., where the Supreme Court upheld that the taxpayer must prove the genuineness of transactions.
Background of the Case
The petitioner, M/S Jaya Traders, engaged in the trade of pan masala and scented tobacco, was transporting goods from West Bengal/Assam to Delhi without an e-way bill, claiming the value was below ₹50,000. The goods were intercepted in Kanpur, leading to:
- Show cause notice issued by tax authorities.
- Petitioner’s defense citing a crossing challan and arguing against jurisdiction for seizure.
- Penalty order upheld in appeal, prompting a challenge before the High Court.
Court’s Observations
The High Court found that:
- The petitioner failed to rebut the driver’s statement that goods were loaded in Kanpur, not West Bengal/Assam.
- No toll receipts or transport records were provided to establish the goods’ movement.
- The petitioner had deliberately undervalued the goods to avoid generating an e-way bill under Rule 138 of GST Rules.
Thus, the burden of proof remained on the assessee, not the tax authorities, in summary proceedings.
Legal Precedents & Compliance Implications
Key Case References:
✅ State of Karnataka Vs. M/s Ecom Gill Coffee Trading Pvt. Ltd. – Burden of proof is on the assessee.
✅ M/s Shiv Trading Vs. State of UP – Assessee must prove actual movement of goods.
✅ M/s Shiv Shakti Trading Co. Vs. State of UP – Undervaluation can justify seizure under GST laws.
What This Means for Businesses:
🚨 Maintain detailed transport records (e-way bills, toll receipts, invoices).
🚨 Ensure accurate valuation of goods to avoid penalties.
🚨 Understand GST compliance rules to prevent arbitrary detentions.
Conclusion
This ruling sets a strong precedent for GST enforcement, emphasizing that taxpayers must maintain verifiable documentation to substantiate claims. It highlights the judiciary’s stance on preventing tax evasion while ensuring due process.