The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow, has upheld a penalty of ₹39.74 lakh on a transporter after finding that the documents carried by its driver related to entirely different goods from those actually loaded in the vehicle.

The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) has observed that subsequently submitting invoices without corresponding e-way bills could not cure the absence of valid documents during transit. It also rejected the transporter’s explanation that the driver had mistakenly received documents meant for another vehicle, noting that no independent records supported the alleged exchange.

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The driver produced tax invoices and bilties issued through M/s Badri Vishal Goods Carriers. However, physical verification at the departmental office revealed a complete mismatch between the documents and the cargo.

The documents covered goods such as table tops, clips, tricycles, roller blinds, tyres, bicycle accessories, pharmaceutical products and other commodities. According to the order, the goods covered by ten specified bilties were absent from the vehicle.

Instead, officers found 23 categories of textile materials and readymade garments, including shirts, jeans, trousers, kurtis, children’s clothing, T-shirts and fabric. No matching invoices, delivery challans or e-way bills accompanied the actual cargo.

The department proceeded under Section 129(1)(b), treating the transporter as a person other than the owner of the goods. A penalty of ₹39,74,712 was imposed under Section 129(3), which the first appellate authority subsequently upheld.

Challenging the penalty, the transporter argued that its booking clerk had mistakenly handed the driver a bundle of documents intended for another vehicle.

It subsequently submitted a set of invoices issued by three registered Delhi suppliers—M/s Shree Maa Trading Co., M/s R.P. Enterprises and M/s Sahib Enterprises. The transporter maintained that these invoices matched the garments found in the vehicle and established that the goods had been sold to retail dealers in Uttar Pradesh.

It further contended that the suppliers had charged the applicable taxes and that the discrepancy arose from an inadvertent mistake rather than an intention to evade tax.

The transporter also disputed the treatment of the goods as having no identified owner. It argued that the suppliers had furnished ownership declarations and that proceedings should therefore have been taken against the actual owners instead of imposing liability on the transporter under Section 129(1)(b).

A separate challenge was raised to the department’s valuation of the goods, which the transporter alleged had been artificially increased without adequate supporting material.

The tribunal rejected the explanation of an accidental exchange of documents because the transporter had failed to produce a verifiable record of the alleged mistake.

It noted the absence of transport manifests, vehicle dispatch logs, RFID or FASTag data, or registration particulars of the second vehicle with which the documents were supposedly exchanged.

In the tribunal’s assessment, a professional logistics operator could not establish such a defence merely through an unsupported statement. Without records identifying the alternative vehicle or tracing the alleged exchange, the bench treated the explanation as an afterthought.

The tribunal also found that the driver had no document matching the garments actually being transported when the vehicle was intercepted. This justified detention and physical verification by the mobile squad.

The tribunal examined Section 68 of the CGST/UPGST Act alongside Rules 138 and 138A governing documents and e-way bills for the movement of goods.

It held that the statutory requirement concerned documentation accompanying the goods during their actual movement. Producing invoices after interception did not retrospectively make the earlier transit compliant.

A significant factor was that no e-way bills had been generated for the subsequently submitted invoices. The tribunal therefore declined to treat those invoices as sufficient to explain or validate the movement of the seized garments.

The bench’s conclusion rested on the combined circumstances of a complete cargo mismatch, the absence of corresponding e-way bills and the failure to substantiate the claimed document exchange.

The transporter relied on the Allahabad High Court decisions in M/s Khan Enterprises v. Additional Commissioner and Another and M/s Riya Traders v. State of UP and Another to contest the application of Section 129(1)(b).

The tribunal distinguished those rulings on the facts before it.

As understood by the bench, the cited decisions protected genuine ownership claims supported by valid documents identifying the consignor or consignee in relation to the goods being transported.

Here, the documents physically carried by the driver related to different entities and commodities. They did not identify the owner of the garments actually found in the vehicle.

The tribunal also referred to deficiencies in the subsequently submitted invoices and the inability to verify the stated unregistered buyers. In these circumstances, it held that the later ownership claims did not require the department to shift the proceedings away from the transporter.

It consequently upheld the application of Section 129(1)(b).

The tribunal also rejected the challenge to the valuation of the garments.

The department had assessed their value by considering product quality, fabric specifications and prevailing wholesale market averages obtained from business portals such as IndiaMart.

The bench found no violation of Section 15 or Rules 27–35 in the valuation adopted in this case. It considered the market-based approach reasonable because the cargo lacked contemporaneous invoices matching the transit and the actual buyers remained untraceable.

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