Facts of the Case

The petitioner, Sachin Jain, generated an e-invoice and e-way bill on 01.08.2024 for supply of Mentha Oil worth Rs. 1,16,12,160/- to a registered dealer in Badaun. The truck was dispatched from Barabanki on 01.08.2024 and reached the outskirts of Badaun the next day, but District Administration traffic restrictions for the Kanwar Yatra kept it parked outside city limits from 02.08.2024 to 05.08.2024. Once restrictions eased, the truck was intercepted by the Mobile Squad on 05.08.2024, and while all documents matched with no discrepancy in quantity, quality, or value, the e-way bill — generated on 01.08.2024 and valid only till 03.08.2024 — had expired and was not renewed. A penalty of Rs. 24,88,320/- was imposed under Section 129(3) of the U.P. GST Act, 2017 via Form GST MOV-9, upheld in appeal under Section 107.

Issues Involved

  1. Whether penalty under Section 129(3) can be imposed for an expired e-way bill alone, where there is no other discrepancy and no material showing intent to evade tax.
  2. Whether the Kanwar Yatra traffic restrictions, being beyond the petitioner's control, excused the technical lapse of non-renewal of the e-way bill.

Petitioner's Arguments

  • All documents pertaining to the transaction — invoice, e-way bill, Mandi Form 9R, Mandi Gate Pass — were in order, and there was no discrepancy in quantity, quality, or value of the goods.
  • The sole default was the expiry of the e-way bill, occasioned entirely by Kanwar Yatra-related traffic restrictions on heavy vehicles beyond the petitioner's control.
  • Without any material showing intent to evade tax, penalty under Section 129(3) could not be imposed, relying on Assistant Commissioner (ST) vs. Satyam Shivam Papers Pvt. Ltd., (2022) 14 SCC 157, and M/s Globe Panel Industries India Pvt. Ltd. vs. State of U.P.

Respondent's Arguments

  • The e-way bill, valid for one day per 200 km, was generated on 01.08.2024 and expired on 03.08.2024; by the time of inspection on 05.08.2024 it had lapsed and was neither renewed (possible for up to 8 hours) nor replaced with a fresh one.
  • This was a clear violation of the Rules justifying the penalty, irrespective of the reasons for the delay.

Court Order / Findings

  • The Court found it undisputed that apart from the e-way bill's expiry, there was no discrepancy whatsoever regarding the quality, quantity, value of goods, or the underlying transaction documents.
  • Relying on Satyam Shivam Papers Pvt. Ltd. and the coordinate bench rulings in M/s Globe Panel Industries, M/s Hindustan Herbal Cosmetics, M/s Falguni Steels, and M/s Akhilesh Traders, the Court held that mens rea — intent to evade tax — is essential for imposition of penalty under Section 129(3), and a technical violation like an expired e-way bill, without more, cannot sustain the penalty.
  • The State's counsel could not point to any material indicating intent to evade tax, nor dispute the settled position in Akhilesh Traders and Globe Panel Industries.
  • The appellate order dated 30.08.2024 and the original penalty order dated 09.08.2024 were quashed and set aside; the petition was allowed with no order as to costs.

Important Clarification

  • A technical lapse such as an expired e-way bill, unaccompanied by any discrepancy in the goods, invoices, or other documentation, does not by itself establish intent to evade tax and cannot sustain a penalty under Section 129(3).
  • Authorities imposing penalty must record a satisfaction, based on material on record, that there was an intent to evade tax; the burden lies on the Department, not the assessee, to demonstrate this.
  • External, uncontrollable circumstances (such as traffic restrictions during religious events) causing delay in transit are a relevant factor negating any inference of deliberate evasion.

Sections Involved

  • Section 129(3), U.P. GST Act, 2017 — penalty for detention/seizure of goods in transit for contravention of the Act.
  • Section 107, CGST Act, 2017 — appeal against the original penalty order, which was dismissed before this writ.

Decision – In Favour of

Assessee. Both the penalty order and the appellate order confirming it were quashed.

Case Details

Court: High Court of Judicature at Allahabad, Lucknow Bench
Case No.: Writ Tax No. 229 of 2024
Coram: Hon'ble Jaspreet Singh, J.
Date of Order: 12.11.2025

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