The Hon’ble Allahabad High Court in T.K. Printers v. Additional Commissioner [WRIT TAX No. 1486 of 2023 dated May 21, 2025] held that tax and penalty under Section 129 of the CGST/UPGST Act cannot be imposed in absence of intent to evade tax, where e-way bill was generated before detention and the goods were part of a stock transfer, not meant for sale.
Facts:
T.K. Printers (“the Petitioner”) is an authorised vendor of Bharat Petroleum Corporation Ltd. (“BPCL”) with a valid GSTIN. BPCL instructed the Petitioner to transport four MPD machines (Petrol and Diesel dispensing units) from Kanpur to its petrol pump in Atarra, District Banda. The goods were loaded onto a vehicle, but due to a technical glitch at BPCL’s office, the e-way bill could not be generated at that moment.
On January 28, 2021, the vehicle was intercepted by the authorities, and a physical inspection revealed no discrepancy in the consignment. However, the goods were detained on January 29, 2021, on the ground that documents were allegedly post-facto.
A show cause notice in Form GST MOV-07 was issued and replied to by the Petitioner along with the subsequently generated e-way bill, but the same was rejected, and an order in Form GST MOV-09 was passed on February 4, 2021, imposing tax and penalty. The appeal against the said order was also dismissed.
The Petitioner contended that the e-way bill was generated before the detention order was passed, that the goods were not for sale but for installation at BPCL’s petrol pump, and that no tax evasion was involved. The Petitioner relied on High Court judgments in M/s Vacmet India Ltd. v. Addl. Commissioner and M/s Goverdhan Oil Mill v. Addl. Commissioner, asserting that the transaction was a stock transfer and not liable to tax under the given circumstances.
Issue:
Whether tax and penalty under Section 129 of the CGST/UPGST Act could be imposed where, the e-way bill was generated prior to detention, and the transaction involved stock transfer of goods not meant for sale?
Held:
The Hon’ble Allahabad High Court in WRIT TAX No. 1486 of 2023 held as under:
- Observed that, the four MPD machines were not intended for sale but for installation at a BPCL petrol pump. A certificate to that effect was on record, and the price of the goods was indeterminable.
- Noted that, the goods were detained only on the ground of non-accompaniment of e-way bill and delivery challan, but the e-way bill had been generated and was submitted before the detention order.
- Held that, none of the authorities below recorded any finding of tax evasion, which is essential for invoking Section 129.
- Observed that, the case was covered by prior rulings in Vacmet India Ltd. and Goverdhan Oil Mill, where similar facts led to quashing of detention orders.
- Held that, the impugned orders dated July 10, 2023, and January 29, 2021, were unsustainable and quashed them accordingly.
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