GSTAT Upholds Relief From ₹91,644 Penalty After Sugar Truck’s Bareilly-To-Etah Diversion, Finding No Evidence Of Tax Evasion

On 21.07.2023, authorities intercepted a vehicle carrying 250 quintals of sugar valued at Rs.9,16,429.

The invoices and e-way bills identified Bareilly as the destination, but the driver said the goods were being taken towards Etah.

The Department treated the deviation as a GST violation and imposed a penalty of Rs.91,644 under Section 129 of the UPGST Act, 2017.

M/s Shanti Sugars explained that Kanwar Yatra traffic restrictions prevented entry into Bareilly and relied on a subsequent e-invoice, e-way bill and bank statements concerning a sale to a registered purchaser at Etah.

The Order-in-Appeal dated 15.10.2024 set aside the penalty.

The Assistant Commissioner, State Tax, appealed that decision to the Tribunal.

The Tribunal applied Section 129 of the UPGST Act, 2017, concerning detention and penalty in cases of contravention during transportation of goods.

It held that a deviation from the declared destination, without evidence establishing an intention to evade tax or an unaccounted supply, was insufficient on the facts of this case to sustain the penalty.

The order refers generally to relevant judicial precedents but does not identify them by name or citation.

The Tribunal considered the destination discrepancy alongside the taxpayer’s explanation that traffic restrictions during the Kanwar Yatra prevented the vehicle from entering Bareilly.

It also considered the subsequent e-invoice, e-way bill and bank statements supporting the sale to a registered purchaser at Etah.

In the absence of evidence that the goods were unaccounted for or that tax was being evaded, the Tribunal found the Department had not established a basis for the Section 129 penalty.

The order summary records the disputed penalty as determined at zero.