Kamla Machines vs. State of U.P. & Ors. (Writ Tax No. 4506 of 2025 High Court of Allahabad)
1. Brief Facts
- The petitioner, registered under Haryana GST, purchased machinery parts from Maharashtra on bill-to-ship basis, where goods were to be delivered to Muzaffarnagar (U.P.).
- Valid tax invoice, GR, and e-way bill were generated prior to movement; the e-way bill was valid.
- During transit, the truck driver fell ill and the journey could not be completed within the validity period of the e-way bill.
- The goods were intercepted on 08.08.2025 at Meerut. All documents were produced and no discrepancy was found.
- Proceedings under Section 129(3) of the GST Act were initiated solely on the ground that the e-way bill had expired, resulting in imposition of penalty of ₹9,29,678/-, which was affirmed in appeal.
The core issue was whether expiry of the e-way bill, without any other adverse material, justified proceedings under Section 129 of the GST Act.
2. Important Key Takeaways
(A) Expiry of E-Way Bill Alone Insufficient
The Court held that goods were seized only on the ground of expiry of the e-way bill and that mere expiry does not establish intention to evade tax.
(B) Mens Rea Required for Section 129 Action
The Court observed that intention to evade tax must be established by the Revenue, and in absence thereof, proceedings under Section 129 cannot be sustained.
(D) Reliance on Earlier Precedents
The Court followed its earlier judgments in:
- M/s Trimble Mobility Solutions India Pvt. Ltd.
- A.A. Plastics Pvt. Ltd.
holding that expiry of e-way bill without adverse material does not justify penalty.
The impugned orders were quashed, and the writ petition was allowed.
3. Author’s Comment – Business Impact
This judgment significantly curtails mechanical invocation of Section 129 for technical lapses.
Practical Implications:
- Expiry of e-way bill, by itself, does not amount to tax evasion.
- Revenue must establish mens rea before invoking detention and penalty provisions.
- Provides strong defence in cases of genuine transit delays (illness, breakdown, etc.).
- Reinforces proportional enforcement under GST regime.
This ruling will serve as persuasive precedent in detention/penalty disputes across jurisdictions.