M.D. Traders Vs State of Uttar Pradesh And Another
Date: October 7, 2025
Subject Matter
Max penalty when goods are accompained by an invoice but no e-way bill is under section 129(1)(a) and not 129(1)(b)
Summary
The petitioner challenged a penalty order issued in Form GST MOV-09 dated August 26, 2025, and the preceding notice (DRC-01/Form GST MOV-07) concerning the detention of goods.
The dispute arose because the goods, while in transit, were not accompanied by an e-way bill. Crucially, the goods were accompanied by a tax invoice that clearly disclosed the full particulars of the owner, a registered dealer.
The Adjudicating Authority had computed the penalty under Section 129(1)(b) of the U.P. Goods and Services Tax Act, 2017. The petitioner contended that, since the owner was registered and disclosed, the penalty should have been computed under the lower rate prescribed by Section 129(1)(a). The petitioner relied on the precedent of Halder Enterprises vs State of U.P.
The High Court allowed the petition, setting aside the penalty order and directing re-determination under the appropriate section.
Erroneous Penalty Section: The Court found that since the goods were accompanied by a tax invoice clearly disclosing a registered owner, the maximum penalty that could have been alleged for the infringement (absence of an e-way bill) was under Section 129(1)(a) (100% of the tax due) and not the higher rate under Section 129(1)(b) (50% of the value of goods or 200% of the tax, whichever is higher, in cases where the owner is not traceable or is not a registered dealer).
Order Set Aside: The impugned order dated 26.08.2025 is set aside.
Direction for Re-computation: The authorities are directed to re-determine the quantum of penalty strictly in accordance with Section 129(1)(a) of the Act within a period of three weeks.
Release of Goods: The goods are directed to be released forthwith, subject to the petitioner depositing the penalty amount as calculated under Section 129(1)(a) on the value of the goods mentioned in the tax invoice.
Remedies Reserved: The petitioner remains free to avail statutory remedies for any other surviving disputes arising from the penalty order.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Pranjal Shukla, learned counsel for the petitioner and Shri Ankur Agarwal, learned counsel for the revenue.
2. Present petition has been filed for the following relief:
“i) issue a writ or direction or pass an order in the nature of Certiorari quashing the impugned notice in DRC-01/Form GST MOV-07 dated 20.08.2025 and the impugned order issued in GST Form GST MOV-09 dated 26.08.2025 passed by the Assistant Commissioner, State Tax Jurisdiction Sector-2 (Mobile Squad-2) Bareilly, Uttar Pradesh, respondent no.2, (Annexure no.9 & 11 the writ petition).”
3. Submission is, undeniably, goods were found accompanying with the tax invoice clearly disclosing full particulars of the owner of the goods, a registered dealer.
4. Thus, whatever infringement may have been alleged for reason of e-way bill not accompanying the goods, it may have resulted in penalty in terms of Section 129(1)(a) of the U.P. Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’), only. However, the Adjudicating Authority has erroneously computed the penalty in terms of Section 129(1)(b) of the Act. On that issue, reliance has been placed on Halder Enterprises vs State of U.P., (2023) 13 Centax 144 (All). That petition was allowed on the following terms:
“12. In light of the above, the order passed by the authorities dated October 19, 2023 is quashed and set aside. The authorities are directed to carry out the exercise in terms of Section 129(1)(a) of the CGST Act within a period of three weeks from today.”
5. For reason of similar facts and there have been no other dispute, no useful purpose would be served in keeping the present petition pending or calling for counter affidavit at this state, let the writ petition be decided with the consent of the parties at the fresh stage.
6. Accordingly, the impugned order dated 26.08.2025 is set aside with the direction upon the authorities to determine the quantum of penalty in accordance with Section 129(1)(a) of the Act within a period of three weeks from today.
7. Subject to the petitioner depositing the penalty amount in terms of Section 129(1)(a) of the Act on the value of the goods as mentioned in the tax invoice, the goods may be released forthwith.
8. If any other dispute survives arising from order imposing penalty, the petitioner may avail its statutory remedies in accordance with law.
9. With the aforesaid observation, present petition stands disposed of. Pending application/s, if any, stand disposed of.