Detention and Penalty of Goods Are Unsustainable Merely Due to Expiry of E-Way Bill: Allahabad High Court

Taxonation | 0000-00-00 00:00:00

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Facts of the Case

The petitioner, a registered GST dealer engaged in the business of purchase and sale of two-wheeler vehicles, challenged the detention and penalty orders passed under the GST law. The dispute arose from orders dated 04.07.2023 and 11.08.2023, passed by the respondent authorities under Section 129(3) of the CGST Act.

The petitioner had placed an order for supply of motorcycles, pursuant to which two tax invoices dated 03.06.2023 were issued—one covering 7 vehicles and another covering 41 vehicles. A consignment note and valid e-way bills were also generated on the same date. Due to non-availability of the originally assigned driver, the goods were transported by an alternative driver and ultimately moved on 14.06.2023 with all requisite statutory documents.

The goods reached the petitioner’s godown on 15.06.2023. However, owing to lack of storage space, unloading could not be done immediately, and the vehicles remained parked near the godown. On the night of 23.06.2023, while the driver was sleeping in the vehicle, the goods were intercepted by the authorities. Physical verification was conducted on 25.06.2023, followed by detention of goods on 26.06.2023, on the ground that the e-way bill had expired and documents were allegedly reused.

An appeal filed by the petitioner against the detention order was dismissed, leading to the present writ petition.

Issue Involved

Whether detention and penalty under Section 129 of the CGST Act can be sustained solely on the ground of expiry of the e-way bill, despite the presence of valid tax invoices, vehicle-specific details, and absence of any intent to evade tax.

Petitioner Arguments:

The goods involved were two-wheeler vehicles, which cannot be sold or used without registration under the Motor Vehicles Act.
Each vehicle was clearly identifiable, as engine number and chassis/body number were specifically mentioned in the tax invoices.
All statutory documents, including tax invoices and e-way bills, accompanied the goods.
The GPS tracking report clearly demonstrated that the goods had reached the destination within the validity period of the e-way bill.
The delay in unloading was due to paucity of space at the godown and not due to any intent to evade tax.
Mere expiry of the e-way bill, without any evidence of tax evasion, cannot justify seizure and penalty.
Allegations of “multiple use” of documents are untenable in the case of uniquely identifiable two-wheeler vehicles.

Reliance was placed on several precedents of the Allahabad High Court, including Trimble Mobility Solutions [2025 TAXONATION 2613 (ALLAHABAD)], Panasonic India [2025 TAXONATION 2047 (ALLAHABAD)], Falguni Steels [2024 TAXONATION 111 (ALLAHABAD)], Shyam Sel & Power Limited [2023 TAXONATION 1684 (ALLAHABAD) and Globe Panel Industries [2024 TAXONATION 186 (ALLAHABAD)], where similar detentions were quashed.

Respondents Arguments:

The goods were being transported on a multiple-trip basis.
The e-way bill had expired at the time of interception.
Therefore, the initiation of proceedings under Section 129 of the CGST Act was justified.

Court’s Observations and Findings

The Court noted that it was undisputed that the goods were two-wheeler vehicles. It observed that:

Two-wheelers are uniquely identifiable by engine and body numbers, which were duly mentioned in the tax invoices.
No material was brought on record by the authorities to show that vehicles with the same engine or body numbers had already been sold or transported earlier.
It is a matter of common knowledge that no two-wheeler can ply on the road without registration, and no evidence was produced to contradict this position.
All requisite documents were available with the goods.
Although the e-way bill had expired, the GPS tracking report confirmed that the goods had reached their destination within time.
Expiry of the e-way bill, in the absence of any evidence of tax evasion, cannot be treated as a deliberate violation.

The Court held that the case was squarely covered by earlier judgments of the High Court, which consistently ruled that procedural lapses without mala fide intent do not warrant seizure or penalty.

Final Order of the Court

The High Court held that the impugned detention and appellate orders were unsustainable in law. Accordingly: