GSTAT Orders Refund Of ₹5.81 Lakh GST Penalty After E-Invoice Portal Glitch, With Manual Invoice And E-Way Bill In Transit

The appellant, a supplier of raised access flooring tiles, was subject to e-invoicing requirements from 1 October 2022. On 6 October 2022, it dispatched goods to Maharashtra with a manual invoice, delivery note and e-way bill, after it was unable to generate an IRN on the e-invoice portal. The vehicle was intercepted the following morning; the IRN was generated later that day.

The authorities treated the absence of a pre-generated e-invoice as a contravention and imposed a penalty of ₹5,81,316 under Section 129(1)(a) of the CGST Act, which the appellant paid through DRC-03 to secure release of the goods. The First Appellate Authority upheld the penalty, and the appellant appealed to the Tribunal.

The Tribunal considered Sections 68 and 129 of the CGST Act, Rules 48(4), 48(5), 55(4) and 138 of the CGST Rules, and Section 20 of the IGST Act. It treated Rule 138 as requiring an e-way bill for the movement of goods and Rule 55(4) as relevant where an invoice could not be issued at removal.

It also relied on Assistant Commissioner (ST) v. M/s. Satyam Shivam Papers Pvt. Ltd., (2022) 14 SCC 157, for the proposition that Section 129 penalties require intent to evade tax; on Athiyan Exports v. State Tax Officer, [2025] 176 taxmann.com 137 (Madras), concerning technical lapses and payment under economic pressure; and on Nancy Trading Company v. State of U.P., Writ Tax No. 892 of 2023, concerning missing e-invoices where other transit documents were present.

The Tribunal distinguished M/s. Jhansi Enterprises v. State of U.P., 2024:AHC:37625, on the basis that it involved the absence of foundational transport documents.

The Tribunal found that the goods were accompanied by an e-way bill, manual invoice and delivery note, and that the IRN was generated the morning after dispatch. It considered the absence of an IRN at interception, in the circumstances described, a technical lapse attributable to portal difficulties rather than evidence of clandestine movement or an intention to evade tax.

Applying its understanding of Satyam Shivam Papers and the other authorities cited, it concluded that the penalty could not be sustained merely because the IRN had not been generated before dispatch. It also held that payment through DRC-03 to secure release of the vehicle did not prevent the appellant from challenging the penalty.

It directed the respondent authorities to refund ₹5,81,316, subject to verification of demand and payment records, within eight weeks, together with statutory interest.