The Allahabad High Court addressed a dispute involving M/s Momin Products and the State of Uttar Pradesh concerning the imposition of a penalty under the U.P. GST Act. The case arose when goods in transit were stopped by a mobile squad, and while they were accompanied by a valid tax invoice, an e-way bill was not presented. The adjudicating authority imposed a penalty under Section 129(1)(b) of the Act, which the petitioner contested, arguing that only Section 129(1)(a) was applicable.
The central issue was whether the penalty could be imposed under Section 129(1)(b) when the goods had a valid tax invoice. The High Court concluded that when goods are accompanied by a valid tax invoice that identifies both the consignor and consignee, the situation falls under Section 129(1)(a), not Section 129(1)(b). The latter applies only when the owner of the goods does not come forward or when ownership cannot be determined from the documents.
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The Court criticized the authorities for mechanically applying a more severe provision without recognizing the statutory differences between the clauses. Consequently, the penalty order was nullified, and the Court instructed that the penalty be recalculated according to Section 129(1)(a), with the goods to be released following this adjustment.
Parties: M/s Mz Momin Products vs. State of Uttar Pradesh and Another
Date: 12 December 2025
Facts:
- The petitioner, a registered dealer, faced proceedings under the U.P. GST Act after goods in transit were intercepted by the mobile squad.
- The goods were accompanied by a valid tax invoice containing complete particulars, though the e-way bill was not produced.
- The adjudicating authority imposed penalty by invoking Section 129(1)(b) of the Act through GST MOV-09 order dated 26.11.2025.
- The petitioner challenged the penalty contending that Section 129(1)(a) alone was applicable.
Issue:
- Whether penalty could be imposed under Section 129(1)(b) of the U.P. GST Act when goods were accompanied by a valid tax invoice?
Order:
- The High Court held that where goods are accompanied by a valid tax invoice disclosing the identity of the consignor and consignee, the case squarely falls under Section 129(1)(a) and not Section 129(1)(b).
- It clarified that Section 129(1)(b) applies only when the owner of goods does not come forward or when ownership is not ascertainable from the accompanying documents.
- The Court found that the authorities had mechanically invoked a harsher provision without appreciating the statutory distinction between clauses (a) and (b).
- Accordingly, the impugned penalty order was set aside with a direction to recompute penalty strictly under Section 129(1)(a) and release the goods thereafter.
