Facts of the Case:  The petitioner challenged the notice issued in Form GST MOV-07 dated 20.08.2025 and the order in Form GST MOV-09 dated 26.08.2025. The goods transported by the petitioner were accompanied by a valid tax invoice disclosing the complete particulars of the owner, who was a registered dealer under GST. However, the consignment was intercepted and detained for non-accompaniment of a valid e-way bill.

The adjudicating authority imposed penalty under Section 129(1)(b) of the Act, treating the case as one involving goods without valid documents. The petitioner contended that since the goods were covered by a genuine tax invoice and there was no dispute regarding tax payment or ownership, the penalty could only be levied under Section 129(1)(a). Reliance was placed on the decision of the Allahabad High Court in Halder Enterprises v. State of U.P., wherein it was held that in cases where goods are accompanied by a valid tax invoice but an e-way bill is missing or defective, penalty should be computed under Section 129(1)(a) and not under Section 129(1)(b).

Issue: Whether the penalty for transportation of goods accompanied by a valid tax invoice but without an e-way bill should be imposed under Section 129(1)(a) or under Section 129(1)(b) of the UPGST Act.

Held that: The Allahabad High Court allowed the writ petition and held as follows:

• Since the goods were accompanied by a valid tax invoice and there was no dispute regarding their ownership or authenticity, the alleged contravention was limited to the absence of an e-way bill.
• Accordingly, the proper provision applicable for levy of penalty is Section 129(1)(a) of the UPGST Act, not Section 129(1)(b).
• The Court set aside the impugned order dated 26.08.2025 and directed the authorities to recompute the penalty under Section 129(1)(a) within three weeks.
• Upon the petitioner depositing the recomputed penalty on the value of goods as per tax invoice, the goods shall be released forthwith.
• If any further dispute remains after recomputation, the petitioner may avail the statutory appellate remedies available under law.

Therefore, the court reiterated that where goods are accompanied by a valid tax invoice but only e-way bill irregularity exists, the penalty is restricted to Section 129(1)(a) of the GST Act. The Court reaffirmed that Section 129(1)(b) applies only when goods are transported without valid documents or ownership proof.

Case Name: M/s M.D. Traders Versus State Of Uttar Pradesh And Another dated 08.10.2025

To read the complete judgement 2025 Taxo.online 2626