The Allahabad High Court in the case of M/S T.K. PRINTERS VERSUS ADDITIONAL COMMISSIONER GRADE 2 AND ANOTHER vide Case No. Writ Tax No. – 1486 of 2023 dated 21.05.2025, highlighted the failure to acknowledge submitted documents and rationale before detention. The Court held that procedural lapses i.e. delayed e-way bill generation, must not be equated with tax evasion. Intent to evade tax must be established for valid invocation of Section 129. Documentation submitted before adjudication must be considered.

Facts of the Case: In this case, the petitioner was transporting 4 MPD (multi-product dispensing) fuel machines from BPCL Kanpur to BPCL’s petrol pump at Atarra, Banda. Due to a technical glitch, the e-way bill wasn’t generated at the time of transport. Goods were intercepted on 28.01.2021; no physical discrepancies found. E-way bill was generated before the final detention order. Stock transfer note and e-way bill were submitted prior to the detention order but were rejected as “after-thought.” However, the authorities still imposed tax and penalty under Section 129. Also, the appeal was rejected without appreciating the evidences and explanations.

The petitioner cited the 9 May 2018 UP Circular, mandating acknowledgment of legitimate explanations and corrected documents before imposing action. However, the authorities ignored these materials, breaching procedural fairness norms.

The Petitioner challenged the Initial detention order dated 29 January 2021 and Appeal rejection order dated 10 July 2023.

Held that: The Court noted that it was a stock transfer, not a sale. BPCL provided certification that the machines were non-tradable items. Also, the authorities did not disputed the fact that goods were moving between BPCL locations—not for external sale. Therefore, no taxable supply.

Further, there was no finding or allegation by the department regarding tax evasion, which is a prerequisite for invoking harsh penal provisions of Section 129. Even though documents weren’t initially available, the e-way bill was generated and submitted well before the final detention order. Authorities failed to consider this fact. The Court stated that such post-interception but pre-detention compliance neutralizes Section 129 triggers. 

Reliance placed upon judgments in the case of Vacmet India Ltd. (2023), wherein held that mere absence of documents during interception does not establish evasion, especially if submitted before final order. Also, judgment in the case of Goverdhan Oil Mill (2024), wherein held that no penalty is sustainable in case of genuine stock transfer and documents are produced.

The Court held that there is no intent to evade tax was established. Orders dated 29.01.2021 and 10.07.2023 were quashed. Also, directed that any amount deposited by the petitioner shall be refunded.

To read the complete judgment 2025 Taxo.online 1100