M/S Lucknow Automotives vs. Assistant Commissioner (Mobile Squad), Gonda

Facts

The appellant, M/s Lucknow Automotives, was intercepted on January 20, 2025, at 7:25 AM while transporting motorcycles. At the time of interception, an E-way Bill had not been generated. Approximately nine minutes later, at 7:34 AM, an E-way Bill was generated and presented to the authorities. The goods were covered by valid invoices and challans, and the transaction involved registered dealers. The appellant maintained that the delay in E-way Bill generation was due to a bona fide human error and that there was no intention to evade tax. Proceedings under Section 129 of the CGST/UPGST Act were initiated, resulting in a penalty of Rs. 2,63,330/-. The First Appellate Authority confirmed this penalty. The appellant then approached the GST Appellate Tribunal.

Held

The Tribunal held that while the generation of the E-way Bill after interception constituted a procedural lapse, it occurred in the context of a genuine and fully identifiable transaction. The Tribunal noted that the E-way Bill was generated within approximately nine minutes and immediately produced. Crucially, there was no independent material to demonstrate suppression, clandestine movement, undervaluation, fake documentation, or any other positive circumstance indicating tax evasion. The goods, being motorcycles with identifiable engine and chassis numbers and subject to RTO registration, were completely traceable. The Tribunal found that a penalty under Section 129 cannot be sustained mechanically where there is no material indicating tax evasion and the lapse is attributable to bona fide human error. The Tribunal distinguished the respondent's cited precedent, finding it factually different. Therefore, the appeal was allowed, the penalty order was set aside, and the deposited amount was ordered to be refunded.

Key Issues

1. Whether penalty under Section 129(3) of the CGST/UPGST Act can be sustained when the E-way Bill was generated after the interception of goods? The appellant argued that while there was a procedural lapse, it was a bona fide human error and not indicative of an intention to evade tax. They contended that the subsequent generation of the E-way Bill, coupled with genuine invoices, identifiable goods (motorcycles with engine and chassis numbers), and no discrepancies in quantity, value, or classification, should lead to the setting aside of the penalty. The appellant relied on various High Court judgments emphasizing the necessity of proving intent to evade tax. The respondent argued that the statutory requirement of having the E-way Bill at the time of interception was not met, and subsequent generation could not retrospectively validate the movement of goods, citing a precedent where a similar lapse led to penalty confirmation. 2. Whether the absence of intention to evade tax and the subsequent generation of the E-way Bill are relevant considerations for setting aside the penalty under Section 129? The appellant argued yes, citing that technical violations without intent to evade tax should not warrant punishment. The respondent argued no, focusing on the non-compliance at the point of interception.