GST Tribunal Upholds Quashing Of ₹2,55,792 Penalty For 5-Km In-State Trip Without Vehicle Details In E-Way Bill Part B

In brief

The question

1. Whether Part-B vehicle details were required for the approximately 5 km movement of the goods within Uttar Pradesh, or whether the movement fell within the Third Proviso to Rule 138(3) of the CGST/UPGST Rules, 2017.

The court held

The Tribunal dismissed the Department’s appeal and left undisturbed the first appellate authority’s decision setting aside the Section 129(3) order and quashing the penalty of ₹2,55,792.

It also directed

It further stated that the amount paid in cash by the trader was eligible for refund or adjustment in accordance with the applicable rules.

01Facts

The dispute arose from the interception on 7 May 2022 of a vehicle carrying Pan Masala and Zarda Tobacco from M/s Prabhu Aastha Enterprise Pvt. Ltd. in Kanpur to M/s Mohit Agency in Gorakhpur.

The Department imposed a penalty of ₹2,55,792 under Section 129(3) of the CGST/UPGST Act, 2017, alleging that Part-B of the E-Way Bills did not contain the vehicle details.

The taxpayer maintained that the goods were being moved approximately 5 km within Uttar Pradesh to a transporter’s depot for onward transportation, and that the short movement was exempt from furnishing Part-B details.

The goods were supported by tax invoices, and physical verification disclosed no discrepancy.

The first appellate authority set aside the penalty; the Department challenged that decision before the Tribunal.

The order’s caption identifies Shaily Singh as appellant, while its narrative describes the appeal as one filed by the Revenue.

02Issues

i.1. Whether Part-B vehicle details were required for the approximately 5 km movement of the goods within Uttar Pradesh, or whether the movement fell within the Third Proviso to Rule 138(3) of the CGST/UPGST Rules, 2017.

ii.2. Whether the penalty under Section 129(3) could be sustained where the goods were supported by valid documents, physical verification disclosed no discrepancy, and no tangible evidence of tax evasion was established.

03Law Applied

Section 129(3) of the CGST/UPGST Act, 2017 provides for penalty in cases involving detention or seizure of goods and conveyances in transit.

The Third Proviso to Rule 138(3) of the CGST/UPGST Rules, 2017 permits non-furnishing of Part-B details where goods are transported for a distance of up to 50 km within the State from the consignor’s place of business to a transporter for further transportation.

The Tribunal applied these provisions to the movement and circumstances described in the order; no judicial precedents are identified.

Provisions in the judgment · 2 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 112 Section 129

04Reasoning

The Tribunal treated the initial 5 km movement within Uttar Pradesh to the transporter’s depot as falling within the Rule 138(3) exemption for short-distance transportation.

It also relied on the fact that the goods matched the tax invoices and that physical verification found no discrepancy.

In the absence of tangible evidence of tax evasion, the alleged omission of vehicle details in Part-B did not justify sustaining the penalty.

05Holding

The Tribunal dismissed the Department’s appeal and left undisturbed the first appellate authority’s decision setting aside the Section 129(3) order and quashing the penalty of ₹2,55,792.

It further stated that the amount paid in cash by the trader was eligible for refund or adjustment in accordance with the applicable rules.

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Original Court PDF