Maruti Enterprises Vs State of U.P. and another (Allahabad High Court)
Allahabad High Court Quashes GST Penalty Because U.P. Was Only a Transit State; GST Authorities Cannot Penalise Inter-State Goods Passing Through Transit State; Cross-Empowerment Under GST Does Not Extend Between Different States; Allahabad High Court Holds Transit State Cannot Levy GST Penalty Without Tax Incidence; Goods in Inter-State Transit Cannot Face Repeated GST Penalties Across States; GST Detention Invalid Because Goods Were Supported by e-Way Bill and Tax Invoice; Purchaser Cannot Be Penalised for Supplier’s Failure to Issue e-Tax Invoice.
The Allahabad High Court considered a batch of writ petitions challenging penalty orders passed under Section 129(1)(d) of the GST Act, 2017 in relation to goods transported through the State of Uttar Pradesh during inter-state movement.
The petitions involved transactions where goods originated in one State and were destined for another State, while merely passing through Uttar Pradesh as a transit State. In the lead matter relating to M/s Maruti Enterprises, dried Areca nuts were transported from West Bengal to Delhi under a tax invoice and e-Way Bill. The goods were intercepted in Gautam Buddh Nagar, Uttar Pradesh, before entering Delhi. During verification, the authorities found that the goods were not accompanied by an e-Tax Invoice as required under Rule 48 of the CGST Rules. Penalty proceedings were thereafter initiated and penalties were imposed.
