The Goods and Services Tax Appellate Tribunal (GSTAT), Varanasi Bench, has set aside a penalty of ₹1,60,216 imposed on a trader transporting areca nuts, holding that a technical mismatch in the place of dispatch did not justify penal action when valid transport documents were available, the transactions were accounted for, and no intention to evade tax was established.

The Bench comprising Narendra Bahadur Yadav (Judicial Member) and Ananjai Kumar Rai, (Technical Member) allowed the appeal filed by Ankit Traders against the adjudication and first appellate orders imposing and confirming the penalty under Section 129 of the CGST/SGST Acts, read with Section 20 of the IGST Act.

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The Tribunal directed that the penalty, if already paid, be refunded in accordance with law.

The dispute arose after the Assistant Commissioner, Mobile Squad, Second Unit, Chandauli, intercepted a vehicle carrying two consignments of areca nuts on February 3, 2024.

At the time of interception, the driver produced goods receipts issued by Kolkata-based CKT Cargo Movers, along with e-invoices and e-way bills relating to supplies from SR Enterprise, located at Purbo Kitterbond in Assam, to Ankit Traders in Kanpur.

One consignment comprised 70 bags of areca nuts, while the other comprised 110 bags. Both e-way bills were dated February 2, 2024.

The tax authorities objected to a difference between the dispatch location recorded in the transporter’s goods receipts and that mentioned in the e-way bills. While the goods receipts indicated Kolkata as the starting point of transportation, the e-way bills recorded Purbo Kitterbond, Assam, as the place of dispatch.

The authorities also relied on the driver’s statement concerning transportation from Kolkata.

Treating the discrepancy as a breach of the statutory requirements, the adjudicating authority imposed a penalty of ₹1,60,216 through an order dated February 5, 2024. The trader’s first appeal was dismissed, prompting the appeal before the Tribunal.

The appellant argued that the difference arose because the consignments travelled in two stages.

According to its submissions, the goods were first dispatched by rail from the supplier’s location in Assam, through the nearest railway station at Monacherra, to Kolkata. They were subsequently transported by road from Kolkata to Kanpur.

Since CKT Cargo Movers handled the road journey, its goods receipts mentioned Kolkata as the place of dispatch. The appellant explained that the driver’s statement was also based on those road transport documents.

The trader maintained that the discrepancy was minor, that the consignments were supported by valid e-invoices and e-way bills, and that there was no intention to evade tax.

It further submitted that the supplies had been duly recorded in the statutory returns and that the applicable tax had been paid.

The State’s representative defended the penalty, arguing that an intention to evade tax was not a necessary ingredient for imposing a penalty under Section 129.

The Tribunal therefore examined whether the mismatch in the dispatch location, without an intention to evade tax, constituted a breach warranting the penalty in the circumstances of the case.

After examining the documents and submissions, the Tribunal found that valid e-invoices and e-way bills had been produced when the vehicle was intercepted.

It accepted the explanation concerning the two-stage movement of the goods as plausible.

The Bench also found that the transport documents, read with the corresponding returns filed by the supplier and recipient, established that both consignments were accounted for and that the applicable tax had been discharged.

The Tribunal noted that the recipient was based in Kanpur and that the tax relating to the transactions accrued to Uttar Pradesh.

In these circumstances, it found no basis to infer an intention to evade tax. The order also recorded that both transactions were reflected in GSTR-2A.

The discrepancy in the dispatch location was therefore insufficient to sustain the penalty when there was no material establishing unaccounted goods or an attempt to evade tax.

The Tribunal relied on High Court decisions addressing technical errors in transport documents.

Referring to M/s Jindal Pipes Ltd. v. Deputy State Tax Officer, it noted the Madras High Court’s approach that minor variations in addresses appearing in tax invoices and e-way bills did not justify the penalty in the circumstances considered there.

It also discussed M/s K.S. Traders v. Deputy Commercial Tax Officer, which concerned a mismatch in transport documentation and applied the reasoning in Jindal Pipes.

The Bench further relied on the Allahabad High Court’s ruling in M/s Saumya v. Union of India, decided on July 14, 2025. As recorded in the Tribunal’s order, that decision concerned a technical error in the dispatch location where there was no intention to evade tax or discrepancy in the goods.

The Tribunal additionally referred to M/s Sangeeta Jain v. Union of India and Others, decided on April 22, 2024, concerning minor clerical or technical errors unsupported by proof of an intention to evade tax.

Drawing on these decisions, the Bench held that procedural lapses without substantive irregularities should not attract punitive consequences in the facts before it.

The Tribunal quashed the adjudication order dated February 5, 2024, and the first appellate order identified in its operative directions as dated October 25, 2025.

It directed the respondent authorities to refund the penalty, if paid, in accordance with the applicable procedure and law. Each party was directed to bear its own costs.

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