Introduction
The introduction of the Central Goods and Services Tax Act, 2017 and its implementing rules modernised India’s indirect tax regime to match the pace and complexity of contemporary commerce. Alongside legitimate compliance mechanisms, however, certain administrative presumptions embedded in the GST framework have produced unintended consequences in private disputes.
One such provision—Rule 138(12) of the CGST Rules, 2017—creates a statutory presumption that an e-way bill is accepted if the recipient does not communicate rejection within seventy-two hours of the details being made available on the GST portal. While this presumption serves an administrative purpose, its misuse has raised serious concerns about the conflation of tax administration with civil liability.
Statutory Framework
Rule 138(11)– (12) of the CGST Rules requires that details of an e-way bill be made available on the common portal to the supplier or recipient, who must then communicate acceptance or rejection of the consignment. Rule 138(12) states that if no communication is received within seventy-two hours, the details shall be deemed accepted.
The CGST Act also prescribes the conditions for issuance of a tax invoice. A tax invoice must be issued before or at the time of supply of goods or services. Issuing an invoice without an actual supply is expressly penalised under Section 122(1)(ii) of the Act, which treats issuance of invoices in violation of the Act or rules as an offence.
Key Statutory Provisions
| Provision | Requirement / Legal Effect |
|---|---|
| Rule 138(11)–(12), CGST Rules | Details of the e-way bill must be made available on the GST portal to the supplier or recipient for acceptance or rejection. |
| Rule 138(12), CGST Rules | If no communication is received within seventy-two hours, the e-way bill details are deemed accepted. |
| Section 122(1)(ii), CGST Act | Issuing invoices without actual supply of goods or services is treated as an offence. |
These provisions operate in two distinct legal spheres: tax administration, which focuses on compliance and revenue collection, and civil law, which governs private rights and obligations between contracting parties. The tension arises when administrative presumptions are invoked to establish civil liability without independent evidence of supply or contractual performance.
Practical Misuse And Risks
A worrying pattern has emerged in commercial practice. Some parties generate GST invoices and e-way bills in the names of others—sometimes without any underlying transaction—with the objective of pressuring the purported recipient into payment or settlement. The typical modus operandi is as follows:
Typical Modus Operandi
- A supplier issues a tax invoice and generates an e-way bill purportedly for delivery to a buyer.
- The buyer, for various reasons (lack of portal access, oversight, or delayed awareness), does not dispute the e-way bill within seventy-two hours.
- The supplier then relies on the administrative presumption of acceptance to assert that goods were delivered and to press civil claims for payment.
Associated Risks
- Coerced settlements. Faced with the administrative presumption and the practical difficulty of contesting it in the short window, recipients may settle false claims to avoid protracted disputes.
- Erosion of evidentiary standards. Reliance on administrative presumptions in civil litigation risks lowering the evidentiary threshold required to prove contractual performance or delivery.
- Criminality masked as commerce. Issuance of invoices without supply is itself an offence under GST law; yet the administrative presumption can be weaponised to extract civil concessions from innocent parties.
These risks underscore the need to distinguish between presumptions created for tax administration and the independent proof required in civil proceedings.
Judicial Clarification
The Delhi High Court’s decision in RFA (Comm.) No. 489/2025, Mohinder Kumar Gandhi v. Praveen Kumar (dated 08.10.2025) provides an authoritative clarification. The Court acknowledged that Rule 138(12) creates a statutory presumption of deemed acceptance for administrative purposes. Crucially, the Court held that this presumption does not discharge the civil burden of proof in a private dispute concerning delivery or contractual performance.
Key Points From The Judgment
- Purpose of the presumption. The presumption is designed to facilitate tax administration and the smooth movement of goods, not to determine private rights between parties.
- Evidentiary independence. Civil liability requires cogent and independent evidence of a business transaction and actual delivery; an undisputed e-way bill alone cannot substitute for such evidence.
- Outcome in the case. The plaintiff failed to produce independent proof of supply or a contractual relationship; accordingly, the suit was dismissed despite the existence of an undisputed e-way bill.
The Court’s reasoning reinforces the legal principle that administrative presumptions are context-specific and cannot be mechanically transposed into the civil domain.
Key Points For Parties And Practitioners
The distinction drawn by the High Court has immediate practical implications for claimants, defendants, and legal practitioners. The following guidance is intended to reduce risk and preserve legal rights.
For Claimants
- Assemble independent evidence. Do not rely solely on a tax invoice or an undisputed e-way bill. Collect and preserve documents such as quotations, purchase orders, delivery challans, transport receipts, proof of stock availability, correspondence, and payment records.
- Document the supply chain. Maintain contemporaneous records of dispatch, carrier details, consignment tracking, and proof of delivery signed by the recipient or an authorised agent.
- Preserve electronic records. Save portal screenshots, e-way bill generation logs, and email or messaging threads that corroborate the transaction timeline.
- Consider criminal remedies. If invoices were issued without supply, explore criminal or regulatory remedies under GST law while simultaneously pursuing civil claims supported by independent evidence.
For Defendants
- Act promptly on the portal. If goods have not been received, dispute the e-way bill on the GST portal within the statutory seventy-two hours to prevent the creation of an adverse administrative presumption.
- Gather rebuttal evidence. Compile proof of non-receipt such as warehouse logs, inventory records, CCTV footage, transport denials, and communications denying receipt.
- Preserve audit trails. Keep records of who accessed the GST portal, when notifications were received, and any technical or administrative obstacles that prevented timely dispute.
- Separate tax and civil defences. While a civil defence of non-supply may succeed in litigation, it does not automatically absolve the defendant of tax liabilities; seek specialist tax advice to address potential GST exposure.
For Legal And Tax Practitioners
- Advise clients on dual tracks. Counsel clients to pursue both civil and tax remedies where appropriate, and to maintain evidence that satisfies both administrative and civil standards.
- Draft robust contracts. Include clear delivery terms, acceptance procedures, and dispute resolution clauses that allocate risk and set out notification protocols for e-way bills.
- Train operational teams. Ensure that commercial and logistics personnel understand the importance of monitoring the GST portal and responding to e-way bill notifications promptly.
- Use checklists. Implement a standard evidentiary checklist for every transaction that includes pre-dispatch approvals, transport documentation, and post-delivery confirmations.
Checklist For Evidence In Civil Claims Based On Invoices
| Sl. No. | Evidence / Document | Description |
|---|---|---|
| 1 | Quotation Or Proposal | Quotation or proposal showing agreed terms and pricing. |
| 2 | Purchase Order | Purchase order or work order issued by the buyer. |
| 3 | Tax Invoice | Tax invoice with matching particulars to the order. |
| 4 | E-Way Bill Record | E-way bill generation record and portal logs. |
| 5 | Transport Documents | Transport documents including consignment notes and carrier receipts. |
| 6 | Delivery Challan | Delivery challan signed by recipient or authorised representative. |
| 7 | Stock Availability Proof | Proof of stock availability at the supplier’s premises at the relevant time. |
| 8 | Correspondence Records | Correspondence (emails, messages) evidencing negotiation, dispatch instructions, or delivery confirmations. |
| 9 | Payment Records | Payment records or bank statements showing any advance or final payments. |
| 10 | Demand Notices | Demand notices and settlement communications, if any. |
Conclusion
Rule 138(12) of the CGST Rules serves a legitimate administrative function: to streamline compliance and facilitate the movement of goods. The Delhi High Court’s recent ruling clarifies that this administrative presumption cannot, by itself, establish civil liability. Civil claims require independent, cogent evidence of supply and contractual performance.
Parties should therefore adopt a twofold approach:
- Preserve and present robust documentary and factual evidence to meet civil evidentiary standards.
- Ensure timely administrative responses on the GST portal to avoid adverse presumptions.
Legal and tax practitioners must guide clients to treat tax presumptions as distinct from civil proof and to take proactive steps—contractual, operational, and evidentiary—to mitigate the risk of misuse.
