The Allahabad High Court upheld a penalty imposed on M/s VRS Foods Ltd. for transporting goods without the necessary documentation. The case involved the company's sale of battery scrap to M/s Shiva Traders, during which the vehicle carrying the goods was intercepted while being diverted for weighment. At the time of interception, no documents were present, leading to the detention of the goods on February 28, 2022, and a subsequent penalty order under Section 129(3) of the UPGST Act. Although the appellate authority later reduced the penalty to ₹1,43,100, the petitioner contended that the movement was exempt under Rule 138(14)(n) due to the weighment being within a 20 km radius and argued there was no intention to evade tax.
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The core issue was whether the penalty under Section 129(3) was justified when goods were moved for weighment without accompanying documents. The court ruled that documents must accompany goods during transit, and their later production cannot rectify the initial non-compliance. The court clarified that Rule 138(14)(n) does not eliminate the requirement for a delivery challan or e-way bill in cases of weighment. Accepting the petitioner's argument, the court noted, would undermine Section 129 by allowing justifications to be concocted after the fact. Consequently, the writ petitions were dismissed, and the penalty was confirmed as valid.
Order date: 17 Sept 2025
Parties: M/s VRS Foods Ltd. v. Additional Commissioner Grade-2 & Ors
Facts -
- Petitioner sold battery scrap to M/s Shiva Traders. The Vehicle carrying goods was diverted for weighment; no documents were present during interception.
- Goods detained on 28.02.2022; order passed under Section 129(3) UPGST Act. Appellate authority reduced penalty to ₹1,43,100/-.
- Petitioner argued exemption under Rule 138(14)(n) (movement within 20 km for weighment) and lack of tax evasion intent.
Issue –
- Whether penalty under Section 129(3) is sustainable when goods are moved for weighment without documents?
Order -
- The Court held that documents must accompany goods during transit; later production cannot cure initial non-compliance.
- Rule 138(14)(n) does not waive the need for delivery challan/e-way bill in weighment cases.
- Accepting petitioners argument would frustrate Section 129, enabling afterthought justifications. Writ petitions dismissed; penalty confirmed as valid.
