Facts of the Case:

In this case, the petitioner engaged in the business of iron bars and angles, purchased goods from M/s S.S. Enterprises, Haryana. The supplier issued a tax invoice dated 03.12.2025. During transit, the goods were intercepted and detained on 03.12.2025 on the ground that no e-way bill accompanied the consignment. Proceedings under Section 129 were initiated: MOV-01 was issued, statements were recorded, physical verification was conducted (MOV-04), and detention order (MOV-06) was passed. Subsequently, show cause notice (MOV-07) dated 18.12.2025 was issued proposing penalty under Section 129(1)(b) of the Act.

The petitioner submitted a reply claiming to be the owner of the goods and sought release under Section 129(1)(a), relying upon Circular No. 76/50/2018-GST dated 31.12.2018 and various Division Bench judgments where goods were directed to be released under Section 129(1)(a) in cases of procedural lapses. 

However, it was admitted by the petitioner that at the time of issuance of the tax invoice, the supplier’s GST registration stood suspended w.e.f. 21.11.2025 and, therefore, e-way bill could not be generated.

Issue:

Whether goods accompanied by a tax invoice issued during the suspension of supplier’s registration can be treated as supported by valid documents. Whether the petitioner could claim benefit of release under Section 129(1)(a) (as owner of goods) despite absence of a valid e-way bill

Held that:

The Court held that once the supplier’s registration stood suspended under Rule 21A(3) of the UPGST Rules, the supplier was legally restrained from making taxable supplies and from issuing tax invoices during the suspension period. Therefore, the invoice dated 03.12.2025 issued after suspension of registration was not a valid tax invoice within the meaning of Sections 2(66) and 31 of the Act and could not be treated as a specified document.

Further, since no valid e-way bill was generated as required under Rule 138(3), and the movement of goods was made without prescribed documents, the petitioner could not claim the benefit of being treated as “owner” under Section 129(1)(a). In the absence of valid documents accompanying the goods, the case squarely attracted Section 129(1)(b).

Further, since no valid e-way bill was generated as required under Rule 138(3), and the movement of goods was made without prescribed documents, the petitioner could not claim the benefit of being treated as “owner” under Section 129(1)(a). In the absence of valid documents accompanying the goods, the case squarely attracted Section 129(1)(b). 

The Court distinguished earlier Division Bench judgments relied upon by the petitioner, observing that in those cases the registration was valid at the time of movement and proper tax invoice and e-way bill were available, or only minor technical defects were involved. In the present case, the supplier’s registration was already suspended at the time of issuance of invoice and no e-way bill was generated, making those precedents inapplicable. Accordingly, the Court found no illegality in the detention and penalty proceedings and dismissed the writ petitions.

Case Name: M/s Shri Baba Traders Versus State of U.P. And 3 Others dated 11.02.2026

To read the complete judgement 2026 Taxo.online 337