E-Way Bill Expiry Without Evasion Intent Cannot Sustain Section 129 Penalty: GSTAT Lucknow

Background and Context

The GST Appellate Tribunal (GSTAT), State Bench, Lucknow, recently delivered a significant ruling in the matter of Om Fuels Vs Pawan Kumar Jeewan, addressing a question that frequently arises in GST enforcement proceedings: can the mere expiry of an e-way bill during transit, standing alone, justify imposition of penalty under Section 129 of the Central Goods and Services Tax Act, 2017 and the Uttar Pradesh Goods and Services Tax Act, 2017?

The Tribunal answered this question in favour of the assessee, setting aside a penalty of ₹1,57,516/- as per Order No. ZD091025142632M dated 24.10.2025, and laying down a clear principle that a procedural documentation lapse must be distinguished from a deliberate intention to evade tax before penal consequences under Section 129 can be validly sustained.

Facts of the Case

The Consignment and the Journey

M/s Om Fuels, a business entity registered under GST with GSTIN 09ABUPJ9796R1ZY and operating from Ayodhya, Uttar Pradesh, had procured goods from the state of Gujarat. The goods were being transported by road from Ahmedabad to Ayodhya — a distance of approximately 1,300 kilometres. The movement was accompanied by a valid tax invoice and an e-way bill, both generated in compliance with the provisions of the CGST/UPGST Act, 2017 and the rules framed thereunder.

The e-way bill accompanying the consignment was valid until 22.10.2025 at 11:59 PM. However, the assessee did not extend the validity of the bill before expiry.

Interception and Penalty

Departmental officers intercepted the vehicle on 24.10.2025 at approximately 06:00 AM, near the declared ship-to address in Ayodhya. Upon examination of the accompanying documentation, the proper officer noted that the e-way bill had already expired. Treating this as a contravention of the applicable statutory provisions governing movement of goods, proceedings were initiated under Section 129 of the CGST/UPGST Act, 2017.

The proper officer passed Order No. ZD091025142632M dated 24.10.2025, imposing a penalty of ₹1,57,516/- on M/s Om Fuels.

First Appeal and Its Outcome

Aggrieved by the penalty order, M/s Om Fuels preferred an appeal before the First Appellate Authority, State Tax, Ayodhya. The assessee contended that the expiry of the e-way bill was neither deliberate nor motivated by any intention to evade tax. However, the First Appellate Authority rejected the appeal and confirmed the penalty vide Order-in-Appeal No. AD091125018789P dated 21.11.2025.

Dissatisfied with this outcome, the assessee approached the GSTAT, Lucknow, by way of a second appeal.

The Tribunal framed the following legal questions for determination:

  1. Whether the mere expiry of an e-way bill's validity, in the absence of any independent evidence establishing an intention to evade tax, is sufficient to justify imposition of penalty under Section 129 of the CGST/UPGST Act, 2017?

  2. Whether a Section 129 penalty can be sustained when the goods were accompanied by relevant transportation documents and the Department failed to establish any deliberate attempt to evade tax?

Assessee's Arguments

The representative of M/s Om Fuels advanced the following submissions before the Tribunal: