GSTAT Upholds Relief For Kanpur Trader From ₹5.12 Lakh Penalty: Missing E-Way Bill Part B Alone Didn’t Show Tax Evasion

On 22 October 2024, a mobile squad stopped goods being transported from Kanpur to Mumbai and found that Part B of the e-way bill had not been updated.

The driver had produced a lorry receipt, tax invoice and e-way-bill Part A slip.

The proper officer detained the goods and imposed a penalty of ₹5,12,676 under Section 129(3) of the CGST/UPGST Acts.

The First Appellate Authority set aside the penalty, and the State appealed to the Tribunal.

The taxpayer objected that the disputed amount fell below the departmental monetary threshold for appeal; it also submitted that the transaction was genuine and supported by an e-invoice and other commercial documents.

The Tribunal considered Section 129 of the CGST/UPGST Acts, which it applied to the detention and penalty proceedings, and Rule 138 of the CGST/SGST Rules, concerning e-way-bill requirements.

It relied on the State Tax Commissioner’s circular dated 5 July 2024, including clause 4(vi), which permits the department to appeal below the specified monetary limits where, in the Commissioner’s opinion, doing so is necessary in the interest of justice or revenue.

The Tribunal also relied on Citykart Retail Pvt. Ltd. v. Commissioner Commercial Tax, Writ C No. 22285 of 2019 (Allahabad High Court, 6 September 2022), and M/s Satyam Traders v. State of U.P., Writ Tax No. 1095 of 2025 (Allahabad High Court, 19 March 2025), among other authority, for the principle that a technical e-way-bill lapse, without material indicating an intent to evade tax, does not justify Section 129 penalty proceedings.

The Tribunal rejected the monetary-limit objection because clause 4(vi) of the circular permits an appeal where the Commissioner considers it necessary in the interest of justice or revenue.

On the merits, it found that the sole stated contravention was the omission to update Part B; the proper officer had made no finding of intent to evade tax, and the department’s grounds of appeal did not assert such intent.

The goods were accompanied by genuine commercial documents, and the e-invoice had been generated on the GST portal before movement and auto-populated in the taxpayer’s GSTR-1.

Applying the cited authorities, the Tribunal concluded that the Part-B lapse, without further evidence of tax-evasion intent, did not sustain the penalty.

It affirmed the First Appellate Authority’s order setting aside the ₹5,12,676 penalty and dismissed the department’s appeal, with no order as to costs.