GSTAT Lucknow Says Mere E-Invoice Lapse Cannot Establish Tax Evasion, Sets Aside ₹63.72 Lakh Penalty

The Lucknow Bench of the Goods and Services Tax Appellate Tribunal (GSTAT) on 28 September held that a procedural lapse in generating an e-invoice, without material showing tax evasion, cannot by itself warrant penalty under Section 129 of the Central Goods and Services Tax Act, 2017.

A Bench comprising Judicial Member Santosh Kumar Srivastava and Technical Member Arvind Kumar allowed VLM Null Group's appeal against the order of the Additional Commissioner, Grade-II, State Tax, Kanpur, imposing a penalty of Rs. 63.72 lakh. The Tribunal observed:

“The mere establishment of a procedural irregularity does not dispense with the requirement of determining whether the particular facts justify the consequence imposed under Section 129.”

VLM Null Group was transporting four FFS machines and parts from Bhiwandi, Maharashtra to Barabanki, Uttar Pradesh. The consignment was intercepted on 6 October 2024 with a tax invoice, E-Way Bill and LR.

The officer found that the invoice did not contain the required Invoice Reference Number and detained the goods. A penalty of Rs. 63.72 lakh, representing 200% of the IGST, was imposed.

The Tribunal noted that the e-invoice was generated on 8 October 2024, before completion of the detention proceedings. The tax invoice, E-Way Bill and transport documents were available at the time of interception, and the transaction was identifiable and matched the subsequently generated e-invoice. It found no material establishing tax evasion or indicating that the transaction was fictitious.

Accordingly, the GSTAT set aside the order and allowed the appeal with consequential relief.