Post-Interception Document Generation Cannot Cure GST Violations Under Section 129 — GSTAT Bengaluru

Background and Overview

The GST Appellate Tribunal (GSTAT), Bengaluru, in Heramb Enterprises Vs C Pushpalatha (Appeal No. APL/142/BUR/2026, decided on 16/09/2026), delivered a significant ruling affirming that the generation of statutory documents such as a tax invoice and e-way bill after the interception of goods cannot be treated as a bona fide explanation for their initial absence. The Tribunal dismissed the appeal filed by Heramb Enterprises and upheld the revisional order restoring tax and penalty levied under Section 129 of the Karnataka Goods and Services Tax Act, 2017 (KGST Act).

This judgment carries important implications for registered dealers engaged in inter-state or intra-state movement of goods, particularly regarding the mandatory pre-movement documentation requirements under Section 68 of the CGST/KGST Acts and Rule 138 of the CGST Rules.

Factual Matrix

On 06/10/2020, a conveyance bearing registration number MH24 AB9709 was intercepted by the proper officer at Udayambag, Belagavi at 1:16 PM. At the time of interception, plywood goods were being unloaded at the premises of REC Flow Technology LLP, Udayambag, Belagavi.

On document verification, the proper officer found the following:

  • A valid tax invoice and e-way bill existed covering the movement of goods from Intercon Wood Industries, Perumbavoor, Kerala to Heramb Enterprises, Yarmal Road, Vadgao, Belagavi.
  • However, no tax invoice and no e-way bill were available to cover the movement and unloading of those very goods at REC Flow Technology LLP, Belagavi — the actual destination at the time of interception.

A show cause notice in Form GST MOV-07 dated 07/10/2020 was issued demanding tax and penalty under Section 129(1) of the KGST Act. Since no objections were filed, the proposals were confirmed by the proper officer via Form GST MOV-09, vide order No. CTO(Enf)-6/BGM/09/20-21 dated 07/10/2020.

Proceedings Before Lower Authorities

First Appellate Authority — Order Favoring the Assessee

The Joint Commissioner of Commercial Taxes (Appeals), Belagavi, in Appeal No. JCCT/AP/BGV/GST-34 of 2020-21/B-776 dated 25/03/2021, allowed the appeal. The Appellate Authority reasoned as follows:

  • The goods had reached the destination within the validity period of the e-way bill.
  • Tax invoices and e-way bills were generated promptly thereafter.
  • No intention to evade taxes could be attributed since all parties — supplier, transporter, and recipient — were registered dealers under the KGST Act.
  • Relying on Section 126 of the Act, the penalty was reduced to Rs. 500 each under the CGST Act and the KGST Act.
  • The decision of the Gujarat High Court in Synergy Fertichem Private Limited Vs State of Gujarat [2020 (33) GSTL 513] was cited in support.

Revisional Authority — Order Restored

The Additional Commissioner of Commercial Taxes (SMR) – 2, Gandhi Nagar, Bengaluru (the Revisional Authority), upon exercising powers under Section 108(1) of the KGST Act, issued a notice dated 11/08/2021 proposing to set aside the Appellate Authority's order on the ground that it was illegal, improper, and prejudicial to revenue interests.

After hearing the assessee, the Revisional Authority found that:

  • The e-way bill relied upon by the Appellate Authority was generated at 01:33 PM on 06/10/2020 — that is, after the interception at 1:16 PM on the same date.
  • The post-interception generation of the e-way bill was an afterthought designed to cover the statutory contravention.
  • The Appellate Authority's order was reversed and the proper officer's original order was restored.

This revisional order, passed vide T No. 212/24-25 – No. ADCOM/ZONE-II/BGV/GST/SMR-07/2021-22 dated 31/08/2024, formed the subject matter of the present appeal before GSTAT.

Issues Before GSTAT

The Tribunal framed two principal issues for determination:

  1. Whether the revisional proceedings were barred by the limitation period under Section 108(2)(b) of the KGST Act?
  2. Whether the Revisional Authority was justified in reversing the Appellate Authority's order and confirming the penalty under Section 129 of the Act?

Issue I — Limitation: Were the Revisional Proceedings Time-Barred?

The Assessee's Argument