In a recent ruling, the Allahabad High Court addressed the issue of tax evasion allegations based on the reuse of e-way bills. The case involved M/s Deepam Packaging and Food Pvt. Ltd., a company transporting goods from Kanpur to Varanasi, whose e-way bill expired during transit. Authorities intercepted the vehicle the following day, accusing the company of reusing the e-way bill to evade tax. The driver confirmed the goods' destination, and the company attributed the delay to a vehicle breakdown. Despite these explanations, the seizure order was upheld without a thorough investigation.
The central question was whether the detention and penalty under Section 129(3) of the CGST Act could be justified without substantial evidence of e-way bill reuse. The petitioner referenced a precedent from the case of M/s Anandeshwar Traders, where the court ruled that seizures could not be upheld without verifying claims through toll or purchaser records.
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The court found that no proper enquiry had been conducted to confirm if the vehicle had reused documents or returned after completing a prior trip. It concluded that mere allegations without corroborative evidence from toll data or purchaser verification were inadequate to prove an intent to evade tax. Consequently, following the precedent set in Anandeshwar Traders, the court quashed the seizure and appellate orders and instructed the refund of any amounts deposited by the petitioner. This decision underscores the necessity of concrete evidence in tax evasion claims related to the use of e-way bills.
Order Date: 04 November 2025
Case Title: M/s Deepam Packaging and Food Pvt. Ltd. v. Additional Commissioner Grade-II & Anr.
Case No.: Writ Tax No. 885 of 2023
Facts –
- The petitioner, a manufacturer of packaging materials, transported goods from Kanpur to Varanasi under a valid e-way bill that expired en route on 03.02.2023.
- The vehicle was intercepted on 04.02.2023, and authorities alleged reuse of the same e-way bill, indicating intent to evade tax.
- The driver’s statement confirmed the goods were en route to Varanasi, and the petitioner clarified the delay was due to vehicle breakdown.
- The seizure order under Section 129(3) CGST Act was upheld in appeal without adequate enquiry.
- The petitioner relied on M/s Anandeshwar Traders v. State of U.P., Writ Tax No. 503/2020, where the Court held that seizure cannot be sustained without verifying reuse through toll or purchaser records.
Issue –
- Whether detention and penalty under Section 129(3) can be sustained without concrete evidence proving reuse of e-way bill documents to evade tax?
Order –
- The Court noted no enquiry was made to verify whether the vehicle had actually reused the same documents or returned after completing a prior trip.
- It held that mere allegation of document reuse, without corroboration from toll data or purchaser verification, is insufficient to establish intent to evade tax.
- Following Anandeshwar Traders (2021), the Court quashed the seizure and appellate orders, directing refund of any deposited amount.
