The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow Bench, has set aside a penalty of ₹1,07,730 imposed over discrepancies in the address mentioned in documents accompanying a consignment of arecanuts. 

The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) observed that an address mismatch, without sufficient supporting evidence, could not automatically establish an intention to evade tax.

The bench found that the discrepancies were technical or procedural and that the department had failed to establish a contravention warranting the penalty.

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The dispute arose after the interception of a vehicle on August 18, 2025, carrying 3,990 kg of arecanuts in West Bengal to M/s A H Traders in Lucknow.

The consignment was accompanied by a tax invoice dated August 13, 2025, transport documents and an e-way bill. During verification, the proper officer noticed that the address appearing in the invoice and transport documents differed from the recipient’s registered principal place of business.

Treating these discrepancies as a contravention of the GST provisions governing the movement of goods, the officer detained the consignment and initiated proceedings under Section 129 of the CGST/UPGST Act, 2017.

An order dated August 19, 2025, imposed a penalty of ₹1,07,730 under Section 129(3), read with Section 20 of the IGST Act, 2017.

The taxpayer challenged the penalty before the Additional Commissioner, Grade-II (Appeal), State Tax, Kanpur. However, the first appellate authority rejected the appeal on November 26, 2025, and upheld the penalty. The taxpayer subsequently approached the GSTAT.

The taxpayer argued that the movement of goods formed part of a genuine commercial transaction supported by a valid invoice, an e-way bill and transport documents.

It submitted that differences in the address and business particulars could not, by themselves, demonstrate deliberate wrongdoing or an intention to evade tax. According to the taxpayer, the department had produced no reliable evidence showing that the transaction was fictitious, that the goods lacked valid documentation or that material facts had been deliberately suppressed.

The taxpayer also challenged the first appellate authority’s examination of the case, arguing that it had upheld the penalty without adequately addressing the documentary evidence and explanations furnished during the proceedings.

The department maintained that discrepancies had been identified during interception and verification of the consignment and that the proper officer had initiated proceedings in accordance with law.

It argued that the taxpayer had not sufficiently established that the discrepancies were merely clerical or procedural. The department also defended the first appellate order and sought dismissal of the second appeal.

Examining the record, the Tribunal held that the department was required to establish the alleged contravention through relevant and reliable evidence.

It found that the mere existence of a discrepancy in an address or other particulars could not automatically be treated as conclusive proof of an intention to evade tax.

In this case, the department had not placed sufficient independent evidence on record to demonstrate that the taxpayer had deliberately transported the goods in contravention of the law with an intention to evade payment of tax.

The Tribunal also recorded that no discrepancies had been found in the quantity or quality of the goods.

Consequently, it concluded that the allegation underlying the penalty remained insufficiently substantiated.

The Tribunal observed that the first appellate authority was required to comprehensively examine the documents and the taxpayer’s explanation.

However, its order did not adequately establish how the discrepancies noticed during inspection provided a legally and factually sustainable basis for imposing the penalty in the absence of sufficient evidence of tax evasion.

The bench emphasised that a penalty must rest on the applicable statutory provisions and the facts established in the particular case. Proceedings under Section 129 could not be sustained merely on assumptions or unsubstantiated technical allegations.

As discussed in the Tribunal’s order, that case involved goods accompanied by invoices, bilty documents and e-way bills, with incorrect addresses appearing in some of the e-way bills. The High Court had found that the documentary circumstances did not give rise to a presumption of tax evasion and that the technical error did not justify the penalty.

Applying that reasoning to the present facts, the GSTAT found that the authorities had failed to appreciate the technical or procedural nature of the discrepancy and the absence of an established intent to evade tax.

The Tribunal allowed the appeal and set aside the first appellate order dated November 26, 2025. It held that the penalty imposed by the proper officer and sustained in the first appeal lacked sufficient evidentiary support.

The Tribunal directed that it be dealt with in accordance with law, subject to verification of payment records and compliance with the applicable statutory procedure.

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