GPS Records and Driver’s Testimony Defeat Paper Compliance: Jharkhand High Court Rules E-Way Bill Must Reflect Actual Loading Point

“Actual loading point was Rupnarayanpur… not what was declared in the E-Way Bill. This falsification is a clear violation of Rule 138 of the CGST Rules” – Jharkhand High Court delivered a significant ruling in M/s. Pratik Enterprises v. Principal Commissioner, CGST & Central Excise, dismissing a writ petition that challenged a GST penalty of ₹3,43,075 imposed under Section 129(3) of the CGST Act. The Court held that despite possession of requisite GST documents like E-Way Bill and e-Invoice, the transporter’s GPS data and the driver’s testimony revealed a mismatch in the actual place of dispatch, thereby constituting a violation of Rule 138 of the CGST Rules.

The Court observed, “While documents may portray legality, the ground reality disclosed through GPS coordinates and the driver’s own words tells a different story—one that leads inevitably to a finding of evasion.”

“A Pile of Cancelled GSTINs Cannot Justify Crores in Input Tax Credit” – Court Slams Suspicious ITC Claims

The facts that unfolded before the Court painted a troubling picture of Input Tax Credit manipulation. The petitioner, M/s. Pratik Enterprises, was found to have availed and utilized ITC worth ₹1.01 crore in FY 2023–2024 and ₹1.03 crore in FY 2024–2025. The critical issue was that most of the suppliers from whom the petitioner allegedly made purchases had their GST registrations either cancelled or suspended, and many were registered in completely unrelated industries.

The Court remarked, “The petitioner has declared purchases from suppliers who were either suspended or cancelled, and the commodities they were registered for had no correlation to the business of PET bottle scrap. This only fortifies the suspicion of fraudulent availment of ITC.”

Further strengthening the case against the petitioner, the records revealed that suppliers such as Jwalaji Distributors, RP Enterprises, Aditya Ribbons, and dozens of others were either inactive, suspended, or registered under dubious commodity codes. The Court noted that such a pattern of claiming ITC from non-existent or bogus entities “raises a presumption of tax evasion which cannot be brushed aside as a mere accounting error.”

“Petitioner Paid Penalty Without Protest, Now Cries Foul: This Writ Petition is an Afterthought”

The petitioner had deposited the penalty to secure release of the detained goods but subsequently approached the Court claiming innocence. The Bench found this sequence of conduct highly suspicious.

The Court stated, “The petitioner did not challenge the detention order at the time and chose to pay the penalty without protest. Having done so, it now seeks to challenge the same in a belated manner. Such litigation is clearly an afterthought and devoid of merit.”

This finding is consistent with judicial discipline that discourages litigants from seeking equitable relief after having already submitted to the statutory penalty without contemporaneous objection.

“Rule 138 is Not a Mere Formality — Mismatch in E-Way Bill and Loading Point Sufficient to Invoke Section 129”

The Court categorically held that possession of an E-Way Bill and e-Invoice is not sufficient when factual inconsistencies, such as a mismatch in declared and actual loading locations, emerge. The High Court underscored that Section 129 of the CGST Act can be triggered even where documentation appears intact, if the factual matrix reveals tax evasion.

As the Court noted, “It is not just the generation of an E-Way Bill that validates the movement of goods under GST law. The information contained therein must reflect actual, verifiable events. Here, GPS data shows the vehicle was stationed for over six hours at Rupnarayanpur—undeniably the real loading point.”

The E-Way Bill had declared Village Sakui, Kharagpur, as the dispatch point. However, GPS coordinates and driver’s statement proved otherwise. This discrepancy was treated as a serious infraction of Rule 138, thereby validating the detention and imposition of penalty.

“Evasion Cannot Be Masked Under the Cloak of Compliance” – A Stern Message from the High Court

In what may serve as a caution to GST assessees attempting to mask evasion through documentation, the Jharkhand High Court emphasized the importance of factual integrity in GST processes.

The concluding paragraph of the judgment drives the message home: “Given the fact that the adjudicating authority was adequately armed with material adverse to the petitioner, we have no doubt in our mind that the instant petition is clearly an afterthought besides being devoid of any merit.”

The Court dismissed the writ petition in limine, sealing its stance on strict GST compliance and reiterating that technology-based verification tools like GPS and real-time movement data now play a decisive role in establishing tax evasion.

Date of Decision: 25 July 2025