In a recent decision, the Allahabad High Court addressed the issue of penalty imposition under the GST framework, specifically concerning the case of M/s Sen Traders v. State of U.P. The petitioner contested the detention of goods and the subsequent penalty proceedings under Section 129 of the CGST/UPGST Act. Despite the goods being transported with a valid tax invoice and e-way bill, the adjudicating authority imposed a penalty under Section 129(1)(b), which applies when goods are transported without valid documents. This section entails a penalty of 50% of the value of the goods.
The petitioner argued that since all necessary documents were in order, only Section 129(1)(a) should apply. This section is less severe and pertains to minor discrepancies in documentation. The petitioner supported their argument by citing a precedent in Halder Enterprises v. State of U.P., where similar errors in penalty imposition were corrected.
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The court agreed with the petitioner, ruling that the goods were indeed accompanied by valid documentation, thus falling under Section 129(1)(a). It found the adjudicating authority's imposition of the harsher penalty under Section 129(1)(b) to be erroneous. Consequently, the penalty order dated October 18, 2025, was quashed, and the court directed a fresh computation of the penalty under the correct section within three weeks. The court also ordered the release of the detained goods, conditional upon the petitioner paying the recomputed penalty. Any further disputes regarding the penalty can be pursued through statutory remedies.
Order Date: 10 November 2025
Case Title: M/s Sen Traders v. State of U.P. & Anr.
Facts
- The petitioner challenged detention of goods and penalty proceedings initiated under Section 129 of the CGST/UPGST Act.
- Goods were accompanied by a valid tax invoice and e-way bill, clearly identifying the consignor, consignee, and the registered dealer.
- Despite proper documents being available, the adjudicating authority imposed penalty under Section 129(1)(b) (50% of the value of goods), treating the case as if goods were transported without valid documents.
- The petitioner argued that at most, only Section 129(1)(a) could apply since documents were complete and valid.
- The petitioner relied on the decision in Halder Enterprises v. State of U.P., (2023) 13 Centax 144 (All), where similar penalty errors were rectified.
Issue
- Whether penalty can be imposed under Section 129(1)(b) when goods are accompanied by valid documents, or whether only Section 129(1)(a) applies?
Order
- The Court held that since goods were transported with valid invoice and e-way bill, the case fell squarely within Section 129(1)(a) and not Section 129(1)(b).
- The adjudicating authority erred in treating the movement as undocumented and imposing penalty under the harsher clause.
- The penalty order dated 18.10.2025 was quashed and the matter remitted for fresh computation under Section 129(1)(a) within three weeks.
- Goods were ordered to be released subject to the petitioner depositing penalty as recomputed under Section 129(1)(a).
- Any further dispute on the recomputed penalty may be addressed through statutory remedies.
