HC Upholds Detention of Goods as Supplier’s GST Was Cancelled Pre-Invoice

Case Details: Raman Metal Works vs. Additional Commissioner - [2025] 174 taxmann.com 94 (Allahabad)

Judiciary and Counsel Details

• Rohit Ranjan Agarwal, J.
• Rahul Agarwal, for the Petitioner.

Facts of the Case

The Petitioner, involved in the purchase and transportation of goods, was the petitioner in the instant writ proceedings. A vehicle carrying goods consigned to the petitioner was intercepted during transit by the revenue authorities. A show cause notice was issued under section 129 of the CGST Act, 2017, and the Uttar Pradesh GST Act on the ground that the supplier’s GST registration had been cancelled prior to the issuance of the tax invoice. A detention order was thereafter passed, and a penalty was imposed on the petitioner under the relevant provisions.

The petitioner’s appeal against the penalty was dismissed by the Appellate Authority, which affirmed the original order. Aggrieved by the concurrent findings, the petitioner filed a writ petition before the Hon’ble High Court. The petitioner contended that the e-way bill for the consignment had been duly generated by the supplier firm, and argued that such generation presumes the supplier’s lawful existence at the time of transaction.

High Court Held

The Hon’ble High Court held that once the GST registration of the supplier firm had been cancelled, the supplier could not have issued a valid tax invoice. The Court categorically observed that the transaction was sham and lacked legal sanctity owing to the non-existence of the supplier in the eyes of law at the time of the transaction. The Court concluded that no infirmity was found in the penalty proceedings or in the order of the Appellate Authority, and hence, the writ petition was liable to be dismissed.