In a recent ruling, the Allahabad High Court quashed a penalty imposed under Section 129(3) of the Goods and Services Tax (GST) Act against M/s Auto Industries. The case involved the interception of goods due to the non-filling of Part B of the e-way bill, which the petitioner attributed to a technical glitch. Despite all other documentation being in order and no intent to evade tax being recorded by the authorities, a penalty was originally imposed, and the petitioner’s appeal was dismissed by the appellate authority.
The petitioner argued that the failure to fill Part B was unintentional and due to technical issues, with no evidence of tax evasion intent. The court noted that multiple precedents, including those from Tata Hitachi and Citykart Retail, support the position that penalties under Section 129 require evidence of deliberate tax evasion, not merely procedural lapses.
The court concluded that in the absence of any findings of intent to evade tax by the authorities, the imposition of a penalty was unjustified. The court quashed the initial penalty order and the subsequent appellate order, directing the department to refund any amounts paid by the petitioner within two months. This decision reinforces the legal principle that procedural errors in e-way bill management, absent an intent to evade taxes, do not warrant penalties under Section 129 of the GST Act.
Parties: M/s Auto Industries v. State of U.P. & Others
Order Date: 21 November 2025
Facts
- Goods of the petitioner, a manufacturer of railway machinery parts, were intercepted on 19.02.2024 because Part B of the e-way bill was not updated.
- All other documents — invoices, e-way bill (Part A), and goods description — were correct and matched the consignment.
- A penalty order under Section 129(3) was passed; the petitioner’s appeal was rejected by the appellate authority on 24.06.2024.
- The petitioner argued Non-filling of Part B was due to a technical glitch. There was no intention to evade tax, and authorities have not recorded any contrary finding.
- Multiple precedents (Tata Hitachi; Citykart Retail; Roli Enterprises; Metloy Cast) hold that mere e-way bill deficiencies do not attract Section 129 penalty absent mens rea.
- The State supported the seizure but did not dispute the legal position that intent to evade is essential under Section 129.
Issue
- Whether penalty under Section 129(3) can be imposed solely due to non-filling of Part B of the e-way bill, without any finding of intent to evade tax?
Order
- The Court held that mere non-filling of Part B—especially when attributed to a technical error—cannot attract penalty under Section 129(3) unless the department records specific findings of intent to evade tax.
- None of the authorities recorded any such intention; all documents otherwise matched the consignment.
- Division Bench rulings (Tata Hitachi; Citykart; Roli Enterprises) consistently hold that Section 129 penalty requires deliberate evasion, not procedural lapses. Consequently, the order dated 20.02.2024 and the appellate order dated 24.06.2024 were quashed.
- The department was directed to refund any amount deposited by the petitioner within two months of receiving the certified copy. Writ petition allowed
