The Lucknow bench of the GST Appellate Tribunal has quashed a Rs 63.72 lakh penalty, emphasising that procedural lapses such as delayed e-invoice generation do not necessarily indicate tax evasion, in a landmark ruling that clarifies enforcement standards.
The Lucknow Bench of the Goods and Services Tax Appellate Tribunal has set aside a penalty of Rs 63.72 lakh after finding that a delay in generating an e-invoice, on its own, did not prove tax evasion. The ruling, delivered on 28 September, came in an appeal by VLM Null Group against an order issued by the Additional Commissioner, Grade-II, State Tax, Kanpur.
The case arose after goods being moved from Bhiwandi in Maharashtra to Barabanki in Uttar Pradesh were stopped on 6 October 2024. The consignment, which consisted of four FFS machines and parts, was accompanied by a tax invoice, an e-way bill and a lorry receipt. Officers said the invoice did not include the required Invoice Reference Number and detained the goods before imposing a penalty equal to 200% of integrated GST.
The tribunal said the missing e-invoice detail amounted to a procedural lapse, but that was not enough by itself to justify action under Section 129 of the Central Goods and Services Tax Act. It noted that the e-invoice was generated on 8 October 2024, before the seizure proceedings were completed, and that the documents available at the time of detention matched the later-generated invoice. The bench found no evidence of a sham transaction, suppression of supply or any other indication that the movement of goods was intended to evade tax.
The decision fits with a line of recent tribunal rulings drawing a distinction between technical non-compliance and conduct that points to concealment. In related matters reported by legal and tax publications, the Lucknow bench has also said that where goods are covered by genuine invoices and transport papers, and the transaction can be clearly identified, penalties should not follow automatically unless there is material showing an intention to evade tax. That approach places the focus on substance as well as form, particularly in disputes involving digital invoicing and transit documentation.
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