Facts of the Case:

M/s Lucknow Automotives, engaged in the purchase and sale of motorcycles and spare parts, was transporting motorcycles under valid invoices/challans. On 20.01.2025, the vehicle was intercepted at about 7:25 A.M., when the E-way Bill had not yet been generated. The E-way Bill was generated at 7:34 A.M., i.e. within nine minutes of interception, and was immediately produced before the authorities. The goods were supported by genuine invoices, challans, ledger accounts and bank records. The motorcycles were also identifiable through their engine and chassis numbers and were subject to RTO registration.

The department initiated proceedings under Section 129(3) of the CGST/UPGST Act and imposed a penalty of ₹2,63,330/-. The First Appellate Authority upheld the penalty. The taxpayer therefore approached the GSTAT challenging the penalty on the ground that the lapse was merely procedural and there was no intention to evade tax.

Issue:

Whether penalty under Section 129(3) could be sustained where goods were transported without an E-way Bill at the time of interception, but the E-way Bill was generated within nine minutes, immediately produced before the authorities, and the underlying transaction was genuine with no discrepancy in quantity, value, classification or any evidence of tax evasion.

Held That:

The GSTAT allowed the appeal and quashed the penalty. The Tribunal acknowledged that generation of the E-way Bill after interception constituted a procedural lapse. However, it held that the lapse was bona fide and not indicative of an intention to evade tax.

The Tribunal noted that the E-way Bill was generated within only nine minutes and immediately furnished to the authorities. The motorcycles were highly identifiable through their engine and chassis numbers, and the transaction was supported by genuine invoices, challans, books of account and banking records. No discrepancy in quantity, value or classification was found, nor was there any evidence of fake documentation, suppression, undervaluation, unaccounted goods or clandestine movement.

Relying upon the principles emerging from decisions such as Uttam Electric Store, OSR Creation, Vishnu Singh, Kunal Aluminum Company, Shyam Sel & Power Ltd. and Falguni Steels, the Tribunal held that a technical E-way Bill lapse, in the absence of positive evidence of an intention to evade tax, cannot by itself justify penalty under Section 129.

The Tribunal distinguished M.B. Computers, relied upon by the Revenue, since that case involved an unfilled Part-B of the E-way Bill and transportation to a different destination, whereas the present case concerned only delayed generation of the E-way Bill.

Case Name: M/s LUCKNOW AUTOMOTIVES v. ASSISTANT COMMISSIONER (MOBILE SQUAD), GONDA, RAJ KUMAR & ORS. dated 19.08.2026

Citation No. 2026 Taxo.online 2493