The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow Bench, has held that the fact that machinery belonged to the appellant and was being transported back from a project site did not, by itself, exempt the movement from the statutory e-Way Bill requirement.
The bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) has rejected an appeal challenging a GST penalty of ₹3.24 lakh imposed on the transportation of an excavator without an e-Way Bill.
The dispute arose from the interception of a vehicle. The vehicle was carrying an excavator machine belonging to the appellant. At the time of interception, the goods were accompanied by a Delivery Challan, but there was no valid e-Way Bill.
Buy Now: 130 GST Judgments – E-Magazine July 2026
The excavator had reportedly been sent to the work site for execution of work. The value of the machine was stated to be approximately ₹9 lakh.
The tax authorities treated the movement as a violation of the provisions governing transportation of goods without the prescribed e-Way Bill. Proceedings were initiated under Section 129(3) of the U.P. GST Act, 2017, resulting in a total penalty of ₹3.24 lakh, comprising ₹1.62 lakh CGST and ₹1.62 lakh SGST.
The original adjudicating authority passed the penalty order on July 18, 2025. The first appellate authority subsequently dismissed the appeal on November 27, 2025, prompting the appellant to approach GSTAT.
The appellant argued that the movement did not arise from any sale or taxable supply. According to the appellant, the excavator had been sent to the project site pursuant to a valid arrangement for use at the site and was subsequently being transported back to its registered place of business.
It was therefore contended that the movement was merely a return of the appellant’s own machinery and could not be treated as transportation involving a taxable supply.
A significant argument raised before the Tribunal was that the Delivery Challan itself established the nature of the movement. The appellant pointed out that both the consignor and consignee mentioned in the Delivery Challan carried the same GSTIN. Thus, according to the appellant, there was no separate buyer, recipient or transferee involved in the transaction.
The appellant further argued that there was no intention to evade tax and that, at most, the absence of an e-Way Bill constituted a procedural lapse.
The appellant also relied upon an alleged exemption relating to movement of goods within 20 kilometres in the State of Uttar Pradesh.
It was submitted that the excavator was transported from Trans Ganga City, Unnao, to the appellant’s registered place of business at Kanpur and that the distance between the loading and destination points was less than 20 kilometres.
According to the appellant, the movement was accompanied by Delivery Challan No. 01 dated July 17, 2025, and therefore both conditions for the claimed exemption were satisfied.
The appellant relied upon several judicial precedents from various High Courts in support of its contention that genuine movements of goods without an intention to evade tax should not automatically attract harsh consequences merely because of procedural deficiencies relating to e-Way Bills.
The Department opposed the appeal and maintained that the penalty order was legally sustainable.
The Department’s representative argued that the excavator had admittedly been found in transit without a valid e-Way Bill. Merely establishing ownership of the machinery, according to the Department, did not dispense with the statutory requirement applicable to movement of goods.
The Department further contended that a Delivery Challan could not automatically substitute an e-Way Bill where the latter was mandatorily required.
It was also argued that the appellant had failed to produce adequate evidence establishing that the movement fell within the alleged 20-kilometre exemption. The Department disputed the applicability of the exemption and submitted that the judicial decisions cited by the appellant were distinguishable on their facts.
The Department therefore urged the Tribunal to uphold the penalty and reject the appellant’s claim for refund.
The Tribunal considered the submissions and observed that the requirement of an e-Way Bill is governed by Section 68 of the CGST/UPGST Acts read with Rule 138 of the relevant Rules.
The Tribunal noted that the requirement applies to movement of goods, including movement for reasons other than supply, subject to specifically prescribed exemptions.
Consequently, the Tribunal rejected the argument that ownership of the excavator by the appellant, by itself, eliminated the requirement to generate an e-Way Bill.
The Tribunal observed that the excavator had admittedly been intercepted while being transported without an e-Way Bill. The mere fact that it was the appellant’s own machinery and was allegedly being returned to its registered premises could not automatically constitute an exemption.
A significant factor in the Tribunal’s decision was the appellant’s failure to satisfactorily establish the tax treatment of the consideration received for the use of the excavator at the project site.
The appellant had stated that the machine was operated on an hourly basis. However, according to the Tribunal, sufficient evidence was not produced regarding the number of hours for which the excavator had operated, the consideration charged for its use and the corresponding discharge of GST.
The Tribunal considered this omission important while examining whether the movement could genuinely be characterised as a mere procedural lapse having no revenue implications.
It held that the circumstances, taken together with the transportation of the excavator without an e-Way Bill, gave rise to a reasonable inference of an intention to evade tax.
Accordingly, the Tribunal declined to accept the appellant’s contention that the matter involved only a technical or procedural violation.
The Tribunal also rejected the appellant’s reliance on the alleged 20-kilometre exemption.
It held that the appellant had not satisfactorily established that the particular movement was specifically covered by the applicable statutory exemption under Rule 138(14) or by any relevant notification issued by the competent authority.
Thus, merely asserting that the distance between the two locations was less than 20 kilometres was not sufficient to establish entitlement to the exemption.
The Tribunal emphasised that an assessee seeking to rely upon a statutory exemption must establish that the precise conditions prescribed for such exemption are fulfilled.
The appellant had relied upon several judgments of the High Courts concerning e-Way Bill violations, transportation of goods and the distinction between substantive tax evasion and procedural lapses.
The Tribunal considered those decisions but found that they could not be mechanically applied to the present case.
According to the Tribunal, the factual circumstances were materially different, particularly because the appellant had failed to establish the tax treatment of the consideration associated with the use of the excavator and the machinery had admittedly been transported without an e-Way Bill.
The Tribunal therefore declined to extend the benefit of the cited decisions to the appellant.
After examining the record, GSTAT concluded that the appellant had failed to establish either a valid exemption from the e-Way Bill requirement or that the violation was merely procedural and had no revenue implications.
The Tribunal accordingly held that the action taken under Section 68 read with Rule 138 and Section 129 of the CGST/UPGST Acts was justified.
The Tribunal upheld both the original adjudication order dated July 18, 2025, and the first appellate authority’s order dated November 27, 2025.
As a result, the appeal was rejected and the ₹3.24 lakh penalty—comprising ₹1.62 lakh CGST and ₹1.62 lakh SGST—stood confirmed.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
