Allahabad High Court Nullifies GST Penalty for Lack of Intent to Evade Tax

Background of the Dispute

The matter in Amplus Kn One Power Private Limited Vs Assistant Commissioner State Tax And Another came before the Allahabad High Court through a writ petition invoked under Article 226 of the Constitution of India. The assessee approached the Court challenging:

  • The seizure of goods in transit, and
  • A show cause notice dated December 6, 2023 issued by the Assistant Commissioner State Tax, Sector 2 Mobile Squad-1, Gautam Budh Nagar under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 (“the Act”).

Alongside, the assessee also requested a direction for refund of the penalty amount that it had paid under protest solely to secure the release of its detained goods.

Facts Leading to Detention

Reason cited by the department

The mobile squad detained the consignment on the ground that the address printed on the tax invoice accompanying the goods did not match the registered place of business of the assessee under GST records at the time of interception.

On this basis alone, proceedings under Section 129 of the Act were triggered, leading to:

  1. Seizure of the goods,
  2. Issuance of the show cause notice dated December 6, 2023, and
  3. Imposition of penalty, which the assessee eventually paid under protest to get the goods released.

Assessee’s explanation

The assessee clarified that:

  • The address mentioned on the invoice was not its principal or additional place of business in the registration certificate on the date of interception.
  • Instead, the address was the project site where the assessee was carrying out its contractual work.
  • The goods were being transported to this project site in the ordinary course of business.

This explanation was not refuted by the revenue during the hearing. No contrary material was produced to suggest that the address was fictitious or unrelated to any genuine business activity.

Subsequent addition of project site

The Court also noted an important factual element:

  • The same project site address was subsequently added to the assessee’s GST registration as one of its places of business.

This subsequent inclusion reinforced the assessee’s stand that the address was a legitimate project location and that the consignment was part of bona fide business operations.

The central legal question was: