Documented Change of Destination Alone Does Not Justify Section 129 Penalty: GSTAT Lucknow

The Goods and Services Tax Appellate Tribunal, Lucknow upheld deletion of a transit penalty on sugar diverted during the Kanwar Yatra and resold under fresh documents.

The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow has held that a penalty under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 cannot be imposed merely because goods covered by valid invoices and e‑way bills were found moving to a destination other than the one declared, where the diversion and a later sale are documented [Sanmati Kumar v. Shanti Sugars, 2026-juristway.com-3423-GSTAT(Lucknow)-GST].

Santosh Kumar Srivastava, Member (Judicial), and Arvind Kumar, Member (Technical), first rejected the trader’s objection that the penalty of ₹91,644 was below the ₹20 lakh limit for departmental appeals in Circular No. 207/01/2024‑GST. Paragraph 4 of the circular excludes issues of a recurring nature, and the Bench held that the legal question, which arises repeatedly in transit checks, fell within that exclusion.

The mobile squad at Budaun intercepted 250 quintals of sugar worth ₹9,16,429 on 21 Jul 2023. The invoices and e‑way bills showed Bareilly as the destination, but the driver said the goods were going to Etah. The trader explained that vehicles could not enter Bareilly because of restrictions during the Kanwar Yatra, and that the goods were sold to a registered buyer at Etah under an e‑invoice and e‑way bill of the same date, with payment through banks.

The Revenue argued that the documents were produced only before the First Appellate Authority as an afterthought, and that the supplier had no branch at Etah.

The Tribunal held that producing documents at the appellate stage does not by itself make a transaction non‑genuine, and that the absence of a supplier branch at Etah was irrelevant because the goods were sold to a separate buyer. The Revenue showed no suppression of turnover, and its claim that the goods would have escaped tax was an assumption. It relied on Assistant Commissioner (ST) v. Satyam Shivam Papers Pvt. Ltd. (SLP (Civil) No. 21132 of 2021) and Allahabad High Court rulings requiring an intent to evade.

The order deleting the penalty was upheld.

2026-juristway.com-3423-GSTAT(Lucknow)-GST