In a recent decision, the Allahabad High Court addressed the issue of whether a transporter could be penalized under Section 129 of the GST Act due to short-loading of goods without evidence of intent to evade tax. The case involved M/s Anish Transport Company, a registered GST transporter that was not involved in the sale or purchase of goods but merely transported them for hire. The incident occurred when goods in transit from Dehradun to Delhi were intercepted at Meerut, revealing a discrepancy between the number of cartons listed on the e-way bill and those physically present. This led to the seizure of the goods and vehicle, followed by a penalty order.
The transporter argued that the shortfall was due to a human error admitted by the consignor, with no intention to evade taxes. Despite this, the appellate authority upheld the penalty. The core issue was whether the transporter could be penalized when the consignor owned the goods and there was no evidence of tax evasion intent by the transporter.
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The High Court ruled in favor of the transporter, stating that there was no evidence of the transporter's involvement in tax evasion or any adverse findings against them. The court emphasized that the proceedings could not continue once the goods were released to the consignor and the error was acknowledged as a loading mistake. Consequently, the seizure and penalty orders were deemed unsustainable, and the court quashed the impugned order, directing a refund of any amounts deposited by the petitioner. The writ petition was allowed, underscoring the importance of intent in tax-related penalties.
Parties: M/s Anish Transport Company v. State of U.P. & Ors.
Order Date: 20 November 2025
Facts
- The petitioner is a registered GST transporter engaged only in carriage of goods for hire, without engaging in sale or purchase of goods.
- Goods in transit from Dehradun to Delhi were intercepted at Meerut on 25.09.2020. Physical verification on 26.09.2020 indicated that only 138 cartons (16,295 boxes) were loaded, whereas the e-way bill showed 167 cartons (19,685 boxes). Based on this shortfall, the goods and vehicle were seized and a Section 129(3) order was passed on 09.10.2020.
- Goods were subsequently released to the consignor/owner on 16.10.2020, with a finding that the goods belonged solely to the consignor.
- The transporter consistently argued that the short-loading occurred due to a human error of labourers, admitted by the consignor; there was no evidence of intention to evade tax on the part of the transporter.
- The appellate authority nevertheless confirmed the penalty in the order dated 26.10.2021.
Issue
- Whether a transporter can be subjected to seizure proceedings and penalty under Section 129 merely due to short-loading of goods, when ownership is admitted by the consignor and no intent to evade tax is attributed to the transporter?
Order
- The Court held that no adverse finding existed showing that the transporter had any role in sale, purchase, or evasion of tax.
- Once the goods were released to the actual owner/consignor, and the error was admitted as a loading mistake, proceedings against the transporter could not be sustained.
- The authorities failed to record any material showing mens rea, and merely being the carrier of goods does not attract liability under Section 129.
- The seizure and penalty orders were therefore unsustainable in law. The impugned order dated 26.10.2021 was quashed.
- Any amount deposited by the petitioner pursuant to the impugned proceedings shall be refunded in accordance with law. Writ petition allowed.
