Expired E-Way Bill Alone Does Not amount to Tax Evasion: Allahabad HC

The Allahabad High Court has recently held that just the expiration of an e-way bill cannot be treated a proof of intent to evade tax.

The petitioner, Kamla Machines, made an inward supply of machinery parts from Mumbai. The goods were being shipped to Ojas Enterprises, Muzzaffarnagar (UP). As per the petitioner, it bought the goods, but the same was supposed to be delivered to Ojas Enterprises. Before the transportation of goods, the e-way bill and other documents were generated, showing the bill-to-ship transaction. The e-way bill was valid up to 07.08.2025. However, since the driver fell ill, the goods could not be delivered within the validity of the e-way bill.

The goods were intercepted by the mobile squad at Meerut when they goods were being transported from Mumbai to Muzaffarnagar. Due to the expiration of the e-way bill, the petitioner was issued a notice and later a penalty order dated 15.08.2025 under section 129(3) of the GST Act, amounting to Rs 9,29,678. The petitioner filed an appeal before the appellate authority, but it dismissed the appeal. Therefore, the petitioner filed an appeal before the Allahabad High Court to challenge the order.

The petitioner argued that the appellate authority has wrongly held that the goods should have been brought to the business place first, and then they should have been sold and sent from Haryana to Muzaffarnagar. The petitioner contended that this was a clear violation of the circular dated 17.01.2024 issued by the Commissioner of State Tax. He also said that it cannot be said that the petitioner was trying to evade taxes just because of the expired e-way bill. The movement of goods was covered with the e-way bills and tax invoices, and the same can be verified from the GST portal.

The petitioner also submitted that the transaction was on a bill-to-ship basis, recognised under section 10(1)(b) of the IGST Act, and in the show cause notice, the appellant authority has not questioned this business procedure.

The Allahabad HC observed that the petitioner’s goods were seized only because the e-way bills had expired. The court cited the case of M/s Trimble Mobility Solutions India Private Limited (supra), which held that if the e-way bill is no longer valid, it cannot be said that the intention was to evade taxes without any material found against the dealer.

Holding the same, the court quashed both the orders, calling them invalid and bad in law.