E-Way Bill Part-B Omission Is a Technical Lapse, Not Tax Evasion: Allahabad High Court Quashes GST Penalty

Overview of the Case

The Allahabad High Court, in Maa Vindhyavasini Tobacco Pvt. Ltd. Vs State of U.P. And 2 Others, examined a significant question arising in GST enforcement proceedings: whether the mere absence of Part-B of an e-way bill, when all other prescribed transport documents are present and in order, can justify the imposition of a penalty under the Goods and Services Tax framework. The Court's answer was an unequivocal no, and it proceeded to quash both the original penalty order and the appellate order that had upheld it.

This ruling reinforces a growing line of judicial reasoning that draws a clear distinction between procedural or technical non-compliance and deliberate tax evasion — a distinction that has significant practical consequences for businesses engaged in interstate movement of goods.

Background and Facts of the Case

The petitioner, Maa Vindhyavasini Tobacco Pvt. Ltd., is a private limited company registered under the Goods and Services Tax, Act, 2017. The company had received an order for the supply of Pan Masala, and the consignment was loaded onto a vehicle for transportation from Kanpur to Surat.

During transit, the goods were intercepted by the authorities. The sole ground for interception was that Part-B of the e-way bill had not been generated. Importantly, all other required documentation — including the tax invoice, lorry receipt (L.R.), and the e-way bill itself (Part-A) — were present and accompanied the consignment at the time of interception.

Following the interception, an order was passed under Section 129 of the GST Act on 13 July 2024, directing the release of the goods subject to payment of penalty. The petitioner challenged this order before the appellate authority. However, the Additional Commissioner Grade-2 (Appeal), Second State Tax, Jhansi, dismissed the appeal on 22 November 2024, without, as the petitioner contended, adequately considering the material on record.

Aggrieved by both orders, the petitioner approached the Allahabad High Court by way of a writ petition.

Arguments Advanced by the Petitioner

The petitioner's counsel, Sri Aditya Pandey, advanced the following submissions before the Court: