The GST Appellate Tribunal (GSTAT) has allowed the appeal of M/s Lucknow Automotives and set aside a penalty of ₹2,63,330 imposed under Section 129(3) of the CGST/UPGST Act in a case where the E-Way Bill was generated approximately nine minutes after interception of the vehicle. The Tribunal found that, although there was a procedural lapse at the time of interception, the surrounding facts did not establish suppression, undervaluation, fake documentation, unaccounted goods or any intention to evade tax.
Background of the Case
M/s Lucknow Automotives, a registered proprietorship concern engaged in the purchase and sale of motorcycles and spare parts, was transporting motorcycles covered by challan/invoice Nos. 405, 406, 407 and 408. The vehicle was intercepted by the Mobile Squad, State Tax, Gonda at approximately 7:25 A.M. on 20 January 2025.
At the precise time of interception, an E-Way Bill had not been generated. However, E-Way Bill No. 471521531708 was generated at 7:34 A.M., approximately nine minutes after interception, and was produced before the inspecting authority.
Proceedings under Section 129 were initiated and a penalty of ₹2,63,330, comprising CGST of ₹1,31,665 and SGST of ₹1,31,665, was imposed. The First Appellate Authority subsequently confirmed the penalty, following which the assessee approached the GST Appellate Tribunal.
Issue Before the Tribunal
The principal issue was whether the absence of an E-Way Bill at the exact time of interception, followed by its generation approximately nine minutes later, justified the penalty imposed under Section 129(3), particularly when the transaction was otherwise supported by genuine invoices and records and there was no material indicating tax evasion.
GSTAT’s Findings
The Tribunal acknowledged that generation of the E-Way Bill after interception constituted a procedural lapse. However, it examined the nature of the transaction and the surrounding circumstances rather than treating the lapse in isolation.
The motorcycles were fully identifiable through invoice particulars, engine numbers and chassis numbers and were also subject to RTO registration. The transaction was supported by purchase and sale invoices, challans, ledger accounts and banking records.
Importantly, the Tribunal recorded that no discrepancy in quantity, value or classification was found. There was also no material showing suppression, undervaluation, fake documentation, unaccounted goods, clandestine movement or any other circumstance indicating an intention to evade tax.
The Tribunal therefore regarded the failure to generate the E-Way Bill before interception, in the circumstances of this case, as a bona fide procedural lapse rather than conduct forming part of an attempt to evade tax.
Reliance on Earlier Judgments
The appellant relied upon several decisions, including M/s Uttam Electric Store v. State of U.P. & 2 Others, M/s OSR Creation v. State of U.P. & 2 Others, and M/s Vishnu Singh v. State of U.P. & Others, concerning E-Way Bill lapses and the relevance of bona fide error and absence of tax-evasion circumstances.
The Tribunal also referred to decisions including Kunal Aluminum Company v. State of Himachal Pradesh, Shyam Sel and Power Ltd. v. State of U.P., and Falguni Steels v. State of U.P., while examining whether a technical violation, unsupported by circumstances indicating evasion, warranted the penalty imposed.
The precedent relied upon by the Revenue concerning M/s B.M. Computers was distinguished on facts, the Tribunal observing that the controversy in that case was materially different.
Decision of the GSTAT
The Tribunal allowed the appeal and set aside the order dated 4 February 2025 passed under Section 129(3), by which the penalty of ₹2,63,330 had been imposed.
The consequential order of the First Appellate Authority confirming the penalty was also set aside.
The Tribunal further directed that the ₹2,63,330 deposited by the appellant pursuant to the impugned proceedings be refunded, subject to verification of payment and compliance with statutory requirements.
Key Legal Takeaway
The decision demonstrates that GST detention and penalty proceedings involving an E-Way Bill lapse must be examined in the factual context of the transaction. In this case, where the E-Way Bill was generated within approximately nine minutes of interception, the goods were fully identifiable, genuine supporting documents existed and no circumstance suggesting tax evasion was established, the GSTAT treated the lapse as procedural and set aside the Section 129 penalty.
The judgment is relevant for GST practitioners and businesses dealing with detention of goods, E-Way Bill compliance and penalties arising from procedural lapses during movement of goods.
