Mere existence of some discrepancies in invoice or e-way bill cannot be the basis for revenue authority to reach at the conclusion that tax had been evaded or the transaction had not been disclosed by taxpayer : High Court 

Facts of Case

Present petition has been filed to challenge the order passed by the appellate authority under the Uttar Pradesh GST Act, 2017.

The explanation furnished by the petitioner with respect to two "loose purchases" referred to by the assessing authority has been rejected, the petitioner has been held liable to tax on the concealed turnover of iron scrap, valued at ₹ 20,00,000/-. Accordingly, tax ₹ 3,60,000/- and penalty ₹ 3,60,000/- have been sustained by the appeal authority. Aggrieved thereby, the petitioner has filed the present petition.

Learned counsel for petitioner submits, in the first place, the assessing authority had passed an order under Section 130 of the Act and treated the entire stock of iron scrap discovered during the survey dated 31.5.2019 to be undisclosed/concealed stocks. That conclusion had arisen solely on account of the non-production of books of accounts by the petitioner. Accordingly, by it's order dated 19.3.2020 passed under Section 130(2) of the Act, the assessing authority had determined the turnover of iron scrap, at the hands of the petitioner, at ₹ 7,46,50,000/-. It was taxed accordingly and penalty was also imposed. Perusal of the said order would reveal that other than the defect of non-production of books of account, assessing authority has also taken into consideration the fact that there were discrepancies arising on the basis of the details mentioned in the auto-populated GSTR-3B and GSTR-2A, filed by the petitioner.

Against the aforesaid order, the petitioner filed an appeal and explained that there was no discrepancy in the GSTR-3B and GSTR-2A. It also sought to reconcile the "loose purchases" with the original tax invoice as also the e-way bills issued from time to time that were otherwise uploaded on the web portal of the revenue authority.

After hearing the parties, the appeal authority accepted the explanation furnished by the petitioner with respect to all but two "loose purchases" relied against. Accordingly, the appeal authority has partly allowed the appeal and sustained the imposition of tax and penalty on the balanced turnover of ₹ 20,00,000/- only, that refers to two "loose purchases" for which the petitioner's explanation was rejected.

Held by High Court

The respondent revenue-authority has not denied the issuance of the invoice and the e-way bills, as claimed by the petitioner. Thus for the purposes of this writ petition, it has to be assumed as correct that the invoice and the e-way bills appended with the writ petition, had been issued. 

Once the revenue authority admits that the invoice and the e-way bills relied upon by it, had been issued in regular course, it is difficult to imagine how the appeal authority could have reached a conclusion that the goods sold or purchased against those invoices were unaccounted for. The invoice is primary evidence of the transaction. Unless the revenue authority disputes it's genuineness, it cannot be lightly overlooked. Then, in the present case, the revenue authorities further admit to the issuance of the e-way bills against the aforesaid invoices. Therefore, the transaction was not only made against the regular invoice but also the details of the transaction were uploaded on the portal of the revenue authority.

In view of the aforesaid facts to permit the revenue authorities, to draw a conclusion of evasion of tax is found to be without any basis. The alleged discrepancy in GSTR-3B and GSTR-2A referred to by the assessing authority did not even find favour with the appeal authority, inasmuch as, it did not refer to the same in the impugned order. Therefore, that part of the submission advanced by learned Standing Counsel cannot be accepted.

Even otherwise, in face of the admission, as to the genuineness and existence of the tax invoice and the e-way bills, mere existence of some discrepancies may not have ever led the revenue authority to the conclusion that tax had been evaded or the transaction had not been disclosed. To hold that there was discrepancy in the account is different and lighter charge than to hold that the assessee had not disclosed or concealed part of it's turnover.

As noted above, once the revenue authority accepted, even if impliedly, that the transaction were covered by regular invoices and those details had been uploaded on the web portal by issuing e-way bills, merely because there may have been existed certain discrepancies, the transaction cannot be said to be one falling under the category of undisclosed turnover.

Accordingly, the present petition succeeds and is allowed. 

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