D.S Traders Vs Commissioner (GSTAT Lucknow)
Summary: The GSTAT, Court No. I, considered an appeal by D.S Traders against penalty proceedings under Section 129(3) of the U.P. GST Act, 2017 arising from transportation of an excavator without an e-Way Bill. The appeal was filed against the original adjudicating authority’s order No. ZD090725182974N dated 18.07.2025 and the First Appellate Authority’s order dated 27.11.2025 concerning goods transported in vehicle No. UP78GN8559.
The appellant’s case was that the excavator had been sent to the work site of M/s OPSIS Projects India Pvt. Ltd. at Trans Ganga City, Unnao, under a valid job work agreement and was being brought back to its registered place of business at Kanpur. The vehicle was intercepted on 18.07.2025 and the goods were accompanied by Delivery Challan No. 01. The machine was stated to be worth approximately Rs. 9,00,000. The proper officer imposed a total penalty of Rs. 3,24,000, comprising Rs. 1,62,000 CGST and Rs. 1,62,000 SGST, under Section 129(3).
The appellant contended that the movement was not pursuant to a sale and involved its own machinery being returned from a project site. It relied upon the Delivery Challan and argued that the consignor and consignee bore the same GSTIN, 09GYMPS0010J1Z7. According to the appellant, there was no buyer, recipient or transferee and the machinery was merely being repositioned. It further submitted that no taxable supply was involved and referred to Section 7 of the CGST/UPGST Acts. The appellant also asserted that Uttar Pradesh had notified an exemption for movement within 20 kilometres within the State where accompanied by a valid Delivery Challan, and maintained that both conditions were satisfied.
The appellant relied on a number of High Court decisions, including D and D Construction and Developers Company v. Additional Commissioner, M/S Varun Beverages Limited v. State of U.P., M/S Shanu Events v. State of U.P., Tata Hitachi Construction Machinery Company (P.) Ltd. v. State of U.P., M/S Jaitron Communication Pvt. Ltd. v. State of U.P. and other decisions listed in the Full Text.
The respondent opposed the appeal. It submitted that the excavator was admittedly in transit without a valid e-Way Bill and that ownership of the machinery or its return from a project site did not, by itself, exempt the appellant from statutory transportation requirements. The respondent contended that a Delivery Challan could not substitute an e-Way Bill where generation of the latter was mandatory. It also disputed the alleged 20-kilometre exemption because the appellant had not produced an applicable notification or circular establishing that the movement was exempt. The respondent further submitted that the cited judicial decisions were distinguishable and could not be mechanically applied.
In its findings, the Tribunal recorded that the excavator was intercepted while being transported without an e-Way Bill. Referring to Section 68 of the CGST/UPGST Act and Rule 138 of the CGST/UPGST Rules, it held that the prescribed e-Way Bill requirement applies to movement of goods, including movement for reasons other than supply, subject to specified exemptions. The fact that the excavator belonged to the appellant and was being returned to its registered premises did not, by itself, exempt the movement from the e-Way Bill requirement.
The Tribunal further found that the appellant had not satisfactorily established the tax treatment of the consideration received for use of the excavator at the project site. Although the appellant stated that the machine operated on an hourly basis, sufficient evidence regarding hours of operation, consideration charged and corresponding GST discharge had not been produced. The Tribunal considered this circumstance, together with transportation without an e-Way Bill, sufficient to give rise to a reasonable inference of intention to evade tax and held that the lapse could not be treated merely as technical.
The Tribunal also rejected the claimed 20-kilometre exemption because satisfactory evidence had not been produced to establish that the movement was specifically covered by the applicable exemption under Rule 138(14) or a relevant notification. It considered the judicial precedents relied upon by the appellant but found their facts and circumstances distinguishable, particularly because the appellant had not established the tax treatment of consideration relating to use of the excavator and the goods were admittedly transported without an e-Way Bill.
The Tribunal accordingly held that the appellant failed to establish either a valid exemption from the e-Way Bill requirement or that the lapse was merely procedural and without revenue implications. The action under Section 68 read with Rule 138 and Section 129 of the CGST/UPGST Acts was held justified. The original adjudicating authority’s order dated 18.07.2025 and the First Appellate Authority’s order dated 27.11.2025 were upheld, and the appeal was rejected.
List of Cases Discussed / Relied Upon
- Fabricship Pvt. Ltd. v. Union of India (Bombay High Court)
- D and D Construction and Developers Company v. Additional Commissioner (Allahabad High Court, decided on 08.04.2025)
- M/s Abhay Prakash Kataria v. State of U.P. (Allahabad High Court, decided on 22.09.2025)
- Sachin Jain v. State of U.P. (Allahabad High Court, Lucknow Bench, decided on 12.11.2025)
- M/s Varun Beverages Limited v. State of U.P. (Allahabad High Court, decided in May 2024)
- M/s Shakuntalam Associates v. Additional Commissioner (Allahabad High Court, decided on 30.07.2025)
- Tata Hitachi Construction Machinery Company (P.) Ltd. v. State of U.P. (Allahabad High Court, decided on 09.05.2025)
- M/s CJ Darcl Logistics Ltd. v. State of U.P. (Allahabad High Court, decided on 04.09.2025)
- M/s Shanu Events v. State of U.P. (Allahabad High Court, decided on 05.08.2022)
- Banaras Industries v. Union of India (Allahabad High Court, decided on 07.11.2024)
- Satyam Traders v. State of U.P. (Allahabad High Court, decided on 19.03.2025)
- M/s Singhal Enterprises v. State of U.P. (Allahabad High Court, decided on 07.11.2025)
- Kitchen Equipments Manufacturing Co. v. Additional Commissioner Grade 2 (Allahabad High Court, decided on 27.02.2025)
- M/s Chawla Sugandhi Bhandar v. State of U.P. (Allahabad High Court, decided on 11.09.2025)
- M/s Rakesh Plastic Furniture and Crockery Emporium v. State of U.P. (Allahabad High Court, decided on 01.09.2025)
- Mohammad Shamasher v. State of West Bengal (Calcutta High Court)
- Prestress Steel LLP v. Commissioner (Uttarakhand High Court)
- Vacmet India Ltd. v. Additional Commissioner (Allahabad High Court)
- M/s Jaitron Communication Pvt. Ltd. v. State of U.P. (Allahabad High Court)
FULL TEXT OF THE JUDGMENT/ORDER OF GSTAT
BRIEF FACTS OF THE CASE:
1. The present appeal is filed by the appellant M/s D.S. Traders, GSTN: 09GYMPS0010J1Z7 against the penalty order passed under Section 129(3) of the U.P. GST Act, 2017 by the original adjudicating authority order no. ZD090725182974N dt. 18.7.2025 and first appellate authority order dt. 27.11.2025, and, in respect of goods being transported in vehicle No. UP78GN8559 without E way Bill.
1.1 On 18.07.2025, the vehicle carrying the goods were intercepted, which were accompanied by Delivery Challan No. 01 dated 18.07.2025 while an Excavator Machine, which was also found along with the goods as mentioned in the challan issued by M/s D.S. Traders, Kanpur, which was being transported without a valid e-Way Bill and consequently treated the transportation as a violation of the Rule 138 Under of UP GST Act provisions relating to movement of goods.
1.2 The Excavator Machine was stated to have been sent to the work site of M/s OPSIS Projects India Pvt. Ltd. at Trans Ganga City, Unnao, for work at the site. The value of the machine/goods was stated to be approximately Rs. 9,00,000.
1.3 The proper officer passed a seizure/penalty order and imposed a total penalty of Rs. 3,24,000.00, comprising Rs. 1,62,000.00 CGST and Rs. 1,62,000.00 SGST, under Section 129(3).
QUESTION OF LAW INVOLVED:
2. Since the goods was being transported without E-Way Bill, which is mandatory under Rule 138(A). Therefore, we find the matter deserve to be heard in Division Bench.
GROUNDS OF APPEAL:
3. The First appellate authority dismissed the appeal primarily on the ground of transit of goods without generating E — Way Bill without examining the substantive merits of the case. Which violates the Principal of Natural Justice as technical procedural lapses cannot overshadow merits of the case.
3.1 The appellant has sent its excavator Machine on rent to M/s OPSIS Projects India Pvt. Ltd. With a valid job work agreement for execution of work at project site, the appellant was bringing back the goods to its registered place of business from project site situated at Trans Ganga City, Unnao to Kanpur, during the course of transaction the same was intercepted by the Mobile Squad of State Tax Department, Kanpur.
3.2 The appellant requested for the quash of the impugned order and allow the appeal and refund the deposited penalty or grant of remedy that this hon’ble tribunal may deem fit and proper in facts and circumstances of the case.
SUBMISSION OF THE APPELLANT:
4. The appellant contended that the movement was not pursuant to a sale, but was for use/work at the site and was supported by the delivery challan and other documents. It was argued that there was no intention to evade tax and that the absence/non-generation of the e-Way Bill is at most a technical/procedural lapse.
4.1 The goods in question of without E way bill was having a delivery challan for return of the machine.
4.2 The appellant submitted that both the consignor and consignee in the Delivery Challan bear the same GSTIN 09GYMPS0010J1Z7. The Appellant is simultaneously the sender and the receiver. There is no second registered person, no buyer, no recipient, no transferee. The machine was simply being repositioned from one location back to its owner.
4.3 The dispute concerns the imposition of a Rs. 3.24 lakh GST penalty on the transportation of an excavator without an e-Way Bill, where the appellant’s case is that the machine was being transported for work/site purposes and there was no sale or intention to evade tax.
4.4 The Appellant submitted that in the present case no sale or taxable supply is involved. Since the goods was a return of the appellant’s own machinery from a job work site to its registered place of business, which does not constitute a ‘Supply’ under Section 7 of CGST/ UPGST Act, and therefore, no question of tax evasion arises.
4.5 The learned counsel for the appellant further submitted that the Government of Uttar Pradesh has, exercising this power, notified that movements within 20 kilometres within the State, accompanied by a valid Delivery Challan, are exempt from the E-Way Bill requirement.
4.6 The distance between the loading point (Trans Ganga City, Unnao) and the destination (1583/2A, Dehli Sujanpur, Kanpur) is under 20 kilometres. The movement was accompanied by Delivery Challan No. 01 dated 17.07.2025. Both conditions of the exemption are satisfied.
4.7 The appellant cited various judicial order pronounced by the Hon’ble High Court, which are produced below-
The Bombay High Court in Fabricship Pvt. Ltd. v. Union of India
The Allahabad High Court in D and D Construction and Developers Company v. Additional Commissioner (April 8, 2025)
i. M/S Abhay Prakash Kataria v. State of U.P. (Allahabad High Court, September 22, 2025)
ii. Sachin Jain v. State of U.P. (Allahabad High Court, Lucknow Bench, November 12, 2025)
iii. M/S Varun Beverages Limited v. State of U.P. (Allahabad High Court, May 2024)
iv. M/S Shakuntalam Associates v. Additional Commissioner (Allahabad High Court, July 30, 2025)
v. Tata Hitachi Construction Machinery Company (P.) Ltd. v. State of U.P. (Allahabad High Court, May 9, 2025)
vi. M/S CJ Darcl Logistics Ltd. v. State of U.P. (Allahabad High Court, September 4, 2025)
vii. M/S Shanu Events v. State of U.P. (Allahabad High Court, August 5, 2022)
viii. Banaras Industries v. Union of India (Allahabad High Court, November 7, 2024)
ix. Satyam Traders v. State of U.P. (Allahabad High Court, March 19, 2025)
x. M/S Singhal Enterprises v. State of U.P. (Allahabad High Court, November 7, 2025)
xi. Kitchen Equipments Manufacturing Co. v. Additional Commissioner Grade 2 (Allahabad High Court, February 27, 2025)
xii. M/S Chawla Sugandhi Bhandar v. State of U.P. (Allahabad High Court, September 11, 2025)
xiii. M/S Rakesh Plastic Furniture And Crockery Emporium v. State of U.P. (Allahabad High Court, September 1, 2025)
xiv. Mohammad Shamasher v. State of West Bengal (Calcutta High Court)
xv. Prestress Steel LLP v. Commissioner (Uttarakhand High Court)
xvi. Vacmet India Ltd. v. Additional Commissioner (Allahabad High Court)
xvii. M/S Jaitron Communication Pvt. Ltd. v. State of U.P. (Allahabad High Court)
SUBMISSION OF THE RESPONDENT:
5. Learned Shri Sanjeev Kumar, Deputy Commissioner, appeared on behalf of the Department and vehemently opposed the appeal. He submitted that the impugned order passed by the First Appellate Authority is legal and proper and does not warrant interference.
5.1 It was submitted that the excavator was admittedly found in transit without a valid e-Way Bill. The mere fact that the machinery belonged to the appellant or was being returned from the project site does not, by itself, exempt the appellant from complying with the statutory requirements relating to transportation of goods.
5.2 The respondent further submitted that the Delivery Challan relied upon by the appellant cannot substitute the e-Way Bill where generation of an e-Way Bill is otherwise mandatory. The plea that there was no sale or intention to evade tax does not, by itself, absolve the appellant from the statutory contravention.
5.3 The respondent specifically disputed the appellant’s contention regarding the alleged 20-kilometre exemption and submitted that the appellant has not produced any applicable notification or circular issued by the competent authority establishing that such movement was exempt from the e-Way Bill requirement.
5.4 As regards the various judicial pronouncements relied upon by the appellant, the respondent submitted that the said judgments are distinguishable on facts and law and cannot be applied mechanically to the present case. The appellant has failed to establish that the facts of the present case are identical to those considered in the cited decisions.
5.5 It was therefore submitted that there was no violation of the principles of natural justice and that the penalty was imposed in accordance with the applicable statutory provisions. Accordingly, the respondent prayed that the appeal be dismissed, the impugned order be upheld, and the prayer for refund of penalty be rejected.
FINDINGS:
6. We have carefully considered the submissions of both sides, the material available on record and the judicial precedents relied upon by the appellant.
6.1 It is an admitted fact that the excavator was intercepted while being transported without an e-Way Bill. Under Section 68 of the CGST/UPGST Act read with Rule 138 of the CGST/UPGST Rules, the prescribed documents/e-Way Bill is required for movement of goods, including movement for reasons other than supply, subject to the specified exemptions. Therefore, the plea that the excavator belonged to the appellant and was being returned to its registered premises does not, by itself, exempt the appellant from the requirement of an e-Way Bill.
6.2 The appellant has also failed to satisfactorily establish the tax treatment of the consideration received for use of the excavator at the project site. Though it has been stated that the machine was operated on an hourly basis, no sufficient evidence regarding the hours of operation, consideration charged and corresponding discharge of GST has been produced. This circumstance, coupled with transportation without an e-Way Bill, gives rise to a reasonable inference of intention to evade tax and cannot be treated as a mere technical lapse.
6.3 The contention regarding the alleged 20-kilometre exemption also cannot be accepted in the absence of satisfactory evidence establishing that the present movement was specifically covered by the applicable statutory exemption under Rule 138(14) or any relevant notification issued by the competent authority.
6.4 We have also considered the judicial precedents relied upon by the appellant. The facts and circumstances of those cases are distinguishable from the present case, particularly where the appellant has failed to establish the tax treatment of the consideration relating to the use of the excavator and the goods were admittedly transported without an e-Way Bill. Hence, the said judgments cannot be mechanically applied to the present case.
6.5 Accordingly, we find that the appellant has failed to establish either a valid exemption from the e-Way Bill requirement or that the lapse was merely procedural and without revenue implications. The action under Section 68 read with Rule 138 and Section 129 of the CGST/UPGST Acts is therefore justified.
ORDER
The order of the original adjudicating authority Order No. ZD090725182974N dated 18.07.2025 and the order of the First Appellate Authority Order No. KNP4/484/AD091025014132Q/2526AKNP002257/2025 dated 27.11.2025, in respect of goods transported in vehicle No. UP78GN8559 without an e-Way Bill, are hereby upheld.
Accordingly, the appeal is rejected.
