Banaras Industries Vs Union of India And 4 Others (Allahabad High Court)
Allahabad High Court in Banaras Industries v. Union of India & Others (2025) addressed the legality of GST penalties and seizure of goods under Section 129(3) of the GST Act when an e-way bill was not generated at the time of interception due to technical issues. The petitioner, Banaras Industries, a partnership firm registered under GST (Registration No. 09AARFB1585E1Z8), was engaged in the manufacture of MS square, MTMS flat, and related products. The firm sold goods to M/s Alok Steel Traders, which were transported via vehicle UP65 R 8124.
On 20 November 2020, the goods were intercepted by the GST Mobile Squad. At the time of interception, all necessary documents accompanied the goods except the e-way bill, which could not be generated due to slow internet/technical glitches. Before the authorities could pass a seizure order, the petitioner produced the duly filled e-way bill, but the officials disregarded it and issued a seizure order with penalties and interest under Section 129(3) of the UP GST Act. The petitioner’s subsequent appeal was dismissed on 27 July 2021, prompting the filing of this writ petition challenging both orders.
Petitioner’s Arguments
Advocate Harsh Vardhan Gupta, representing the petitioner, argued that:
1. All other statutory documents were in order at the time of interception.
2. The e-way bill was produced before the seizure order, rectifying any technical lapse.
3. No evidence or finding was recorded by the authorities regarding the intention to evade tax, which is essential for imposing penalties under Section 129(3).
To support this position, the petitioner relied on earlier Allahabad High Court judgments, including M/s Falguni Steels v. State of U.P. [Writ Tax No. 146/2023, 25.01.2024] and M/s Bans Steel v. State of U.P. [Writ Tax No. 577/2022, 09.08.2024]. In these precedents, the Court held that when all other documents are in order and the e-way bill is produced before the seizure order, penalties cannot be sustained in the absence of mens rea (intent to evade tax).
