The Bengaluru Bench of the GST Appellate Tribunal (GSTAT) has set aside an integrated tax of ₹2,72,294 and an equal penalty imposed on the assessee after a consignment was intercepted with expired e-way bills.
The bench of Srikanth Venkatraman (Judicial Member) and Sudha Koka (Technical Member) found that the goods were accompanied by invoices and other transport documents, and that the authorities had identified no discrepancy in the goods or evidence of tax evasion.
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The dispute arose when a vehicle carrying the company’s goods from Nagpur to Ramanagara district in Karnataka was intercepted on June 24, 2019. The driver produced a lorry receipt, two tax invoices, two e-way bills and a test certificate. The e-way bills, however, had expired on June 21.
The tax officer treated the movement as one without valid e-way bills and initiated proceedings under Section 129 of the Central Goods and Services Tax Act. The officer imposed an integrated tax of ₹2,72,294 and a penalty of ₹2,72,294. The appellate authority upheld the demand in February 2020, leading the company to approach the GSTAT.
The assessee explained that its e-way bill software automatically calculated the travel distance and validity period from the destination entered by an operator. According to the company, the operator entered “Ramnagar” instead of “Ramanagara”. The system consequently calculated a distance of 83 kilometres and assigned a shorter validity period.
The company argued that this was an entry error, not an attempt to conceal the transaction. The invoices accompanied the goods, and their details had been uploaded to the e-way bill portal. It also challenged the officer’s suggestion that the transaction would have gone unaccounted for if the vehicle had not been stopped.
The department maintained that an expired e-way bill was no longer a valid transit document. It argued that Section 129 could be invoked for the contravention without separately proving an intention to evade tax, and that the company had failed to extend the bills’ validity.
The Tribunal noted that expiry of the e-way bills was the only defect identified when the vehicle was intercepted. It examined the two invoices and found that integrated tax had been charged on the supplies. The officer’s physical verification report also recorded no difference between the goods described in the invoices and the goods found in the vehicle.
The bench said the authorities had not found that use of the expired e-way bills resulted in tax evasion. It held that the reasonableness of a taxpayer’s explanation was relevant before invoking Section 129 in the circumstances of this case.
The Tribunal also considered the CBIC circular of September 14, 2018, and judicial decisions distinguishing minor procedural errors from more serious violations. It found the authorities’ cited cases distinguishable, including decisions concerning incomplete e-way bill details or different statutory penalty provisions.
“There was no intention to evade the payment of tax by the appellant,” the Tribunal recorded. It concluded that invoking Section 129 on these facts was unjustified.
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