Lucknow Automotives Vs Assistant Commissioner (Mobile Squad), Gonda, Raj Kumar & Ors. (GSTAT Division Bench, Uttar Pradesh – Lucknow Bench)
Summary: GSTAT, Division Bench, Uttar Pradesh (Lucknow Bench), considered an appeal under Section 112 of the Central Goods and Services Tax Act, 2017 against an order dated 04.02.2025 passed under Section 129(3) of the CGST/UPGST Act, 2017 and the consequential appellate order. A penalty of Rs.2,63,330/-, comprising CGST of Rs.1,31,665/- and SGST of Rs.1,31,665/-, had been imposed and deposited by the appellant, M/s Lucknow Automotives. The vehicle carrying motorcycles was intercepted on 20.01.2025 at about 7:25 A.M. when the E-way Bill had not yet been generated; E-way Bill No. 471521531708 was generated at 7:34 A.M., approximately nine minutes after interception. The appellant contended that the motorcycles were covered by genuine invoices and challans, the transaction was between registered dealers, the goods were identifiable through engine and chassis numbers and R.T.O. registration, and the delay resulted from a bona fide human error without any intention to evade tax. The appellant relied, among others, upon M/s Uttam Electric Store v. State of U.P. & 2 Others and M/s Osr Creation v. State of U.P. & 2 Others. The Department submitted that there was admittedly no E-way Bill at the time of interception and that subsequent generation could not retrospectively validate the movement of goods, relying upon M/s M.B. Computers v. Uttar Pradesh. The Tribunal found that generation of the E-way Bill after interception constituted a procedural lapse, but noted that the transaction was genuine and fully identifiable, the E-way Bill was generated within approximately nine minutes and immediately produced before the authority, and the record contained no independent material indicating suppression, clandestine movement, undervaluation, fake documentation or other positive circumstances indicating tax evasion. The Tribunal further considered the appellant’s cited decisions, including M/s Osr Creation, and distinguished the precedent relied upon by the respondent on the basis that the issue in that matter concerned an unfilled Part B of the E-way Bill and transportation to a different destination, whereas the present matter concerned submission of the E-way Bill after interception. The Tribunal therefore allowed the appeal, set aside the order dated 04.02.2025 imposing the penalty of Rs.2,63,330/- and also set aside the order of the First Appellate Authority confirming the penalty. It further directed that the amount of Rs.2,63,330/-, if deposited by the appellant pursuant to the impugned proceedings, shall be refunded in accordance with law, subject to verification of payment and statutory requirements.
Cases Discussed
- M/s Uttam Electric Store v. State of U.P. & 2 Others, Writ Tax No. 153 of 2021 — referred to by the appellant on bona fide human error in an E-way Bill and absence of material indicating tax evasion.
- M/s Osr Creation v. State of U.P. & 2 Others, Writ Tax No. 1914 of 2024 — relied upon by the appellant and considered by the Tribunal in relation to a subsequently generated E-way Bill and absence of intention to evade tax.
- M/s Vishnu Singh v. State of U.P. & Others, Writ Tax No. 599 of 2024 — referred to by the appellant on the relevance of bona fide human error where the surrounding circumstances do not establish tax evasion.
- Kunal Aluminum Company v. State of Himachal Pradesh, (2025) 16 GSTJ Online 373 (HP) : (2025) 55 GSTJ 587 — relied upon by the appellant in support of the submission that Section 129 penalty requires intent to evade tax.
- Shyam Sel and Power Ltd. V. State of U.P., (2024) 13 GSTJ Online 147 (All): (2024) 51 GSTJ 409 — referred to by the appellant concerning the requirement of intent to evade tax for Section 129(3) penalty.
- Falguni Steels v. State of U.P., (2024) 13 GSTJ Online 150 (All): (2024) 51 GSTJ 422 — referred to by the appellant concerning technical violations and absence of intent to evade tax.
- M/s M.B. Computers v. Uttar Pradesh, Writ Petition No. 1559 of 2024 — relied upon by the respondent and distinguished by the Tribunal on the basis of the factual difference concerning an unfilled Part B of the E-way Bill and transportation to a different destination.
FULL TEXT OF THE ORDER OF GSTAT, DIVISION BENCH, UTTAR PRADESH [LUCKNOW BENCH]
This appeal has been preferred under Section 112 of the Central Goods and Services Tax Act, 2017 read with the corresponding provisions of the Uttar Pradesh Goods and Services Tax Act, 2017 against the order dated 04.02.2025 passed under Section 129(3) of the CGST/UPGST Act, 2017 and the consequential order passed by the First Appellate Authority in Appeal No. AD0905250107428/2025.
By the impugned order, penalty of Rs.2,63,330/-, comprising CGST Rs.1,31,665/- and SGST Rs.1,31,665/-, was imposed upon the appellant. The said amount was admittedly deposited by the appellant. The appeal record reflects the aforesaid penalty and payment particulars.
Question of law involved.
Since the goods (Scrap) were being transported without E-way Bill, which is mandatory under Rule 138(1). Therefore, we find the matter should be heard in Division Bench.
BRIEF FACTS
The appellant, M/s Lucknow Automotives, is a registered proprietorship concern engaged in the business of purchase and sale of motorcycles and spare parts. On 20.01.2025 at about 7:25 A.M., vehicle No. UP32 DN 2873, carrying motorcycles covered by Challan/Invoice Nos. 405, 406, 407 and 408, was intercepted by the Mobile Squad, State Tax, Gonda. At the precise time of interception, the E-way Bill had not been generated. However, E-way Bill No. 471521531708 dated 20.01.2025 was generated at 7:34 A.M., approximately nine minutes after interception, and the same was produced before the inspecting authority.
The appellant has consistently stated that the goods were covered by genuine tax invoices and that the transaction was in between registered dealers. The appellant has further relied upon its purchase invoices, tax invoices, challans, ledgers and bank statements. Proceedings under Section 129 were initiated and penalty of ₹2,63,330/- was imposed. The appellant preferred an appeal before the First Appellate Authority, which was dismissed and the penalty was confirmed. The appellant has therefore approached this Tribunal seeking setting aside of both the orders and refund of the amount deposited.
3. GROUNDS OF APPEAL
The appellant has challenged the impugned orders substantially on the following grounds-
Penalty has been imposed merely on account of a procedural lapse, there was no intention to evade tax, the E-way Bill was generated within nine minutes of interception, the lapse occurred due to bona fide human error, valid tax invoices and delivery documents were accompanied the goods. The goods were motorcycles identifiable by engine and chassis numbers. The transaction was duly recorded in the books of account, no discrepancy in quantity, value or classification was found, no loss of revenue, the supporting documentary evidence was not properly appreciated. The penalty was excessive and disproportionate. The proceedings were initiated without establishing any intention to evade tax.
The following precedents were referred by the appellant-
3.1 M/s Uttam Electric Store
In M/s Uttam Electric Store v. State of U.P. & 2 Others, Writ Tax No. 153 of 2021, decided on 26.07.2024, the Hon’ble Allahabad High Court recognized that where an E-way Bill lapse is attributable to bona fide human error and there is no material indicating tax evasion, proceedings under Section 129 cannot be sustained mechanically.
3.2 M/s Osr Creation
In M/s Osr Creation v. State of U.P. & 2 Others, Writ Tax No. 1914 of 2024, decided on 27.01.2025, the Hon’ble Allahabad High Court emphasized that the effect of an E-Way Bill lapse must be examined in the factual circumstances of each case, particularly where the requisite document is subsequently produced and no discrepancy is found.
3.3 M/s Vishnu Singh
In M/s Vishnu Singh v. State of U.P. & Others, Writ Tax No. 599 of 2024, decided on 20.02.2025, the Hon’ble Allahabad High Court reiterated the relevance of bona fide human error where the surrounding circumstances do not establish tax evasion.
4. SUBMISSIONS OF THE APPELLANT
The Learned counsel for the appellant stated that the transaction in question is a genuine transaction in between registered dealers.
It is submitted that the motorcycles were supported by proper invoices and challans and that all relevant records were maintained in the ordinary course of business. It is further submitted that the E-way Bill was generated at 7:34 A.M., only about nine minutes after the vehicle was intercepted at 7:25 A.M., and the same was immediately made available to the seizing authorities.
Learned Counsel submits that the delay was neither deliberate nor motivated by any intention to evade tax and was attributable to a bona fide mistake. It is emphasized that there was Genuine invoice, No excess quantity, undervaluation, wrong classification, fake consignee, suppression of transaction, unaccounted goods and loss of revenue.
It is submitted that motorcycles are highly identifiable goods having engine and chassis numbers as well as are subject to R.T.O. registrations, making the transaction completely traceable.
The Appellant relied upon some further more judgments which are as under:
Himachal Pradesh High Court held Section 129 penalty requires intent to evade tax; quashed penalty for technical e-way bill lapse and ordered release of bank guarantee with interest – Kunal Aluminum Company v. State of Himachal Pradesh, (2025) 16 GSTJ Online 373 (HP) : (2025) 55 GSTJ 587.
The Allahabad High Court quashed Section 129(3) penalties, holding that intent to evade tax is essential and was absent in the case – Shyam Sel and Power Ltd. V. State of U.P., (2024) 13 GSTJ Online 147 (All): (2024) 51 GSTJ 409.
The Court quashed penalties, emphasizing that technical violations without intent to evade tax cannot warrant punishment – Falguni Steels v. State of U.P., (2024) 13 GSTJ Online 150 (All): (2024) 51 GSTJ 422.
On the basis of above facts and judgements the appellant prays that the penalty be set aside and the amount deposited to be refunded.
5. SUBMISSIONS OF THE RESPONDENT
Shri Mahendra Pratap Singh, learned Assistant Commissioner of authorized representative appeared for department appellant and argued vehemently. He contended the appellant’s ground of appeal.
It is submitted that the appellant admittedly had no E-way Bill at the time of interception. The E-way Bill was generated only after the vehicle had been intercepted and, therefore, the statutory requirement had not been complied with at the relevant point of time. It is contended that subsequent generation of the E-way Bill cannot retrospectively validate the movement of goods.
He also relied on the judgement which is quoted in the first Appellate Authority order. The judgment is writ no. M/s M.B. Computers v. Uttar Pradesh.
The Authorised Representative therefore submitted that the appeal is liable to be dismissed.
6. DISCUSSION
We have carefully considered the submissions of the parties and perused the material on record.
It is undisputed that the E-way Bill was generated approximately nine minutes after interception. Thus, there was a procedural lapse at the time of interception. The goods were motorcycles, fully identifiable through their invoice particulars and engine and chassis numbers as well as subject to R.T.O Registration. The transaction was supported by purchase and sale invoices, challans, ledger accounts and bank records. No discrepancy in quantity, value or classification has been found, and there is no material on record indicating suppression, undervaluation, fake documentation, unaccounted goods or any intention to evade tax.
7. FINDING
After considering the entire material, we record the following findings:
The E-way Bill was admittedly generated after interception. which constituted a procedural lapse on the part of the appellant. However, the lapse occurred in the background of a genuine and fully identifiable transaction. The E-way Bill was generated within approximately nine minutes and immediately produced before the authority. No independent material has been brought on record demonstrating suppression, clandestine movement, undervaluation, fake documentation or any other positive circumstance indicating tax evasion. The peculiar facts of this case, to be a bona fide procedural lapse rather than an act forming part of an attempt to evade tax. This is also noteworthy that the transaction material was Motorcycles which are highly identifiable goods having engine and chassis numbers as well as subject to R.T.O. registration.
The decision relied upon appellant particularly M/s OSR Creation supported out and out to the present facts of the case, as the E-way bill was generated on 21.11.2002 at 4:59 P.M., while the goods was intercepted at 6pm but due to lacks of intention to evade tax, penalty order has been quashed. Besides this, mentioned other decisions are also applicable in the appellant’s matter due to lack of intention to evade tax.
As far as the respondent mentioned precedent writ petition no. 1559 of 2024 B M Computers. We gone through deeply this judgement. We find that the matter involved in this judgement is totally different from the appellant’s matter because in this judgement the issue is involved unfilled part B of E-Way Bill and the goods was being transported for different destination. Whereas, the Appellant issue is only related to the E-Way bill submission after the interpretation of the goods.
ORDER
1. In view of the foregoing discussion, the appeal is ALLOWED.
2. The order dated 04.02.2025 passed by the Proper Officer under Section 129(3) of the CGST/UPGST Act, 2017, imposing penalty of CGST –Rs. 1,31,665/-, SGST –Rs. 1,31,665/- and amounting to – Rs. 2,63,330/- is hereby SET ASIDE. Consequently, the order passed by the First Appellate Authority in Appeal No. AD0905250107428/2025, whereby the penalty was confirmed, is also SET ASIDE.
3. The amount of Rs. 2,63,330/-, if deposited by the appellant pursuant to the impugned proceedings, shall be refunded to the appellant in accordance with law, subject to verification of the payment and statutory requirements.
