The Goods and Services Tax Appellate Tribunal (GSTAT), Agra State Bench, has dismissed a departmental appeal challenging the cancellation of a ₹5,12,676 penalty imposed for transporting goods without updating Part B of an e-way bill.

The Bench of Ajeet Singh (Judicial Member) and Vivek Kumar (Technical Member) has observed that genuine commercial documents rebutted the presumption of an intention to evade tax. The department had sought to justify the penalty solely on the basis of a statutory violation, without establishing any underlying intention to evade tax.

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The dispute arose after a mobile squad inspected a vehicle transporting goods from Kanpur to Mumbai at Raksa, Jhansi, at approximately 6:05 a.m. on October 22, 2024.

The driver produced a transport bilty issued by Tirupati Road Lines, an e-tax invoice dated October 21, 2024, issued by assessee, and the related e-way bill Part A slip.

However, the mobile squad found that Part B of the e-way bill had not been updated. Treating the omission as a contravention of the GST law and rules, the officer detained the goods and vehicle and initiated proceedings under Section 129.

The taxpayer’s explanation was rejected, and a penalty of ₹5,12,676 was imposed on October 22, 2024.

The Additional Commissioner, Grade II (Appeal-II), State Tax, Jhansi, set aside the penalty through an order dated November 13, 2024. The State tax department challenged that decision before the Tribunal.

The department argued that furnishing conveyance details in Part B of the e-way bill was mandatory under Rule 138 of the CGST/SGST Rules.

According to the Revenue, an e-way bill without the required Part B particulars was incomplete and invalid for the movement of goods. It maintained that the requirement enabled authorities to track consignments and prevent tax evasion.

The department contended that the first appellate authority had wrongly treated the omission as a minor or technical lapse. It sought restoration of the original penalty on the ground that the relief granted was prejudicial to revenue.

The taxpayer submitted that both the buyer and seller were bona fide registered dealers and that the transaction was supported by an e-invoice generated through the GST portal.

Its counsel stated that the e-invoice contained the e-way bill number, while the vehicle number appeared on the transport bilty. The transaction details were available on the portal before the goods moved and were auto-populated in GSTR-1.

Counsel also submitted that payments had been received through the State Bank of India.

Relying on Allahabad High Court decisions concerning technical e-way bill defects, the taxpayer argued that the penalty could not be sustained without establishing an intention to evade tax.

The taxpayer separately questioned the maintainability of the departmental appeal, contending that the disputed amount fell below the monetary limit prescribed in the Commissioner of State Tax’s circular dated July 5, 2024.

The Tribunal rejected this objection after examining the exceptions contained in the circular.

It referred to clause 4(vi), which permits appeals irrespective of monetary limits where, in the Commissioner’s opinion, contesting the matter is necessary in the interest of justice or revenue.

The Bench took the view that, where an appeal was filed on that basis, the Commissioner’s opinion could not be challenged and the Commissioner was not required to state the grounds or reasons supporting it.

The appeal was therefore examined on merits.

The Tribunal found that the mobile squad’s only objection was the failure to update Part B of the e-way bill.

The adjudicating officer had imposed the penalty solely for contravention of the provisions, without recording a finding that the taxpayer intended to evade tax.

The Bench also noted that the department’s grounds of appeal did not allege any underlying intention to evade tax. Instead, the Revenue sought to sustain the penalty on the basis of the violation alone.

The issue before the Tribunal was consequently whether a technical error could justify a penalty under Section 129(3), particularly where the transaction was otherwise genuine.

The Tribunal relied on Allahabad High Court decisions, including M/s Satyam Traders v. State of U.P. and Others, decided on March 19, 2025, and M/s Hindustan Herbal Cosmetics v. State of U.P. and Others, decided on January 2, 2024.

As explained in the Tribunal’s order, these authorities treated an intention to evade tax as an essential requirement for imposing a penalty in cases involving technical defects and otherwise genuine transactions.

The Bench emphasised the relevance of genuine commercial documentation in rebutting a presumption of evasion and the need for reasoned findings on intent.

It also found the facts comparable to M/s Citykart Retail Pvt. Ltd. v. Commissioner Commercial Tax, decided on September 6, 2022. That case concerned an unfilled Part B, without an allegation that the goods were being transported without payment of tax.

Applying these principles, the Tribunal noted that the transaction involved two bona fide registered traders and that the e-invoice had been generated before the movement of goods.

The transaction information was available on the GST portal and auto-populated in GSTR-1. On those facts, the Bench found that an intention to evade tax had not been established.

It concluded that the genuine documents accompanying the goods rebutted the presumption of tax-evasion intent and justified the cancellation of the penalty.

The Tribunal held that the departmental appeal disclosed no material fact demonstrating any infirmity in the first appellate authority’s order.

It therefore affirmed the order and dismissed the Revenue’s appeal. No costs were awarded.

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