The Goods and Services Tax Appellate Tribunal (GSTAT), Bengaluru, has upheld the levy of tax and penalty under Section 129 of the Karnataka Goods and Services Tax Act, 2017, after finding that the taxpayer generated the relevant tax invoice and e-way bill only after learning that the goods had been intercepted.
The Bench of Srikanth Venkatraman (Judicial Member) and Sudha Koka (Technical Member) observed that goods transported to the actual place of delivery must be accompanied by the relevant statutory documents. Generating a fresh e-way bill after interception could not cure the contravention where the taxpayer failed to establish that the omission resulted from a technical glitch.
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A vehicle carrying plywood was intercepted by the Commercial Tax Officer on October 6, 2020, at Udayambag in Belagavi. At the time of interception, the goods were being unloaded at the premises of REC Flow Technology LLP.
The documents available with the vehicle, however, covered the movement of plywood from Intercon Wood Industries in Perumbavoor, Kerala, to the appellant at Yarmal Road, Vadgaon, Belagavi.
No tax invoice or e-way bill covering the onward supply or delivery of the goods to REC Flow Technology LLP was available when the vehicle was intercepted.
The proper officer issued a show-cause notice in Form GST MOV-07 and demanded tax and penalty under Section 129(1) of the KGST Act. Since no objections were filed, the demand was confirmed through an order issued in Form GST MOV-09 on October 7, 2020.
The first appellate authority initially granted relief to the taxpayer. It held that the goods had reached the destination within the validity period specified in the e-way bill and that the necessary invoice and e-way bill were subsequently issued.
It further observed that all the dealers involved in the transaction were registered under the GST law and, therefore, there was no intention to evade tax. Applying Section 126, which deals with general disciplines relating to penalties, the authority reduced the penalty to ₹500 each under the CGST and KGST Acts.
The appellate authority relied on the Gujarat High Court’s decision in Synergy Fertichem Private Limited v. State of Gujarat, which distinguished serious statutory violations from minor or procedural lapses.
The Additional Commissioner initiated revision proceedings under Section 108(1) of the KGST Act on the ground that the appellate order was illegal, improper and prejudicial to the interests of the revenue.
The revisional authority found that the documents carried with the goods did not cover their movement or delivery to REC Flow Technology LLP. It also noted that the fresh e-way bill was generated at 1:33 PM on October 6, 2020—after the vehicle had already been intercepted at 1:16 PM.
The subsequent generation of the e-way bill was treated as an afterthought intended to cover the contravention. Accordingly, the revisional authority reversed the appellate order and restored the tax and penalty imposed by the proper officer.
The appellant challenged that decision before the GSTAT.
Before the Tribunal, the taxpayer argued that the supplier, transporter and recipient were registered under GST and that the transaction was genuine and properly recorded in the books of account.
It claimed that the relevant e-way bill could not be generated earlier because of a technical glitch and that the failure was merely procedural. According to the taxpayer, Section 129 should not have been invoked in the absence of an intention to evade tax.
Reliance was placed on the Telangana High Court’s decision in Assistant State Tax Officer v. Satyam Shivam Papers Private Limited and the Kerala High Court’s ruling in Podaran Foods India Private Limited v. State of Kerala.
The department maintained that the original invoice and e-way bill covered movement only up to the appellant’s premises. No document existed for unloading the goods at REC Flow Technology LLP. It argued that subsequent generation of documents did not establish the absence of an intention to evade tax.
The taxpayer also contended that the revisional order dated August 31, 2024, was barred by limitation.
It submitted that, under Section 108(2)(b), the revisional authority could exercise its powers only within three years from the date of the first appellate order. Since the appellate order was passed on March 25, 2021, the revision should have been completed by March 25, 2024.
The Tribunal rejected the limitation argument after applying the Supreme Court’s COVID-19 limitation-extension orders.
It noted that the Supreme Court had directed the exclusion of the period from March 15, 2020, to February 28, 2022, while calculating limitation under general and special laws for judicial and quasi-judicial proceedings.
After excluding the applicable period, the Tribunal held that the revisional authority could have passed the order on or before February 26, 2025. The order issued on August 31, 2024, was therefore within limitation.
The Tribunal also relied on the Supreme Court’s decision in G.R. Infra Projects Limited v. State of Madhya Pradesh, observing that the benefit of the excluded COVID-19 period applies to departmental proceedings as well.
On the merits, the GSTAT referred to Section 68(1), which requires the person in charge of a conveyance to carry the prescribed documents, and Rule 138(1), which requires Part A of Form GST EWB-01 to be generated before the commencement of movement.
The Tribunal found that although the consignment carried an invoice and e-way bill issued by the Kerala supplier in favour of the appellant, those documents did not cover delivery of the plywood to REC Flow Technology LLP.
It further found that the appellant was aware of the procedure but issued the relevant invoice and e-way bill only after becoming aware of the detention.
The Bench refused to accept the explanation concerning a technical glitch because the taxpayer had not produced any supporting evidence.
“This violation would not have come to light if the interception had not taken place,” the Tribunal observed, concluding that the circumstances demonstrated an intention to evade payment of tax.
The GSTAT held that the first appellate authority had incorrectly relied on the Gujarat High Court’s ruling in Synergy Fertichem. While accepting the principle that every statutory violation should not be treated alike, the Tribunal said that the existence of an intention to evade tax must be determined from the facts of each case.
The Tribunal distinguished Satyam Shivam Papers, noting that the case involved transportation under an expired e-way bill. In that situation, the Telangana High Court held that an intention to evade tax could not be presumed merely because the validity of the e-way bill had expired.
In the present case, however, there was no invoice or e-way bill covering the delivery of the goods to REC Flow Technology LLP at the time of interception.
The Tribunal ruled that transporting goods without the relevant tax invoice and e-way bill could not be treated as a minor procedural lapse. The later generation of documents was an attempt to cover the pre-existing contravention.
Accordingly, the GSTAT held that the imposition of penalty under Section 129(1) was legal and valid, confirmed the revisional authority’s order and dismissed the taxpayer’s appeal.
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