• Dated 09^th December, 2025

Absence of Mens Rea Invalidates Penalty for E-Way Bill Expiry

Facts of the Case

The petitioner, a registered dealer of Mentha Oil, received a purchase order from M/s Radial Natural Aeromatics Pvt. Ltd., Badaun. In pursuance of this order, the petitioner generated an e-invoice dated 01.08.2024, an e-way bill, and Mandi documents including Form 9R and a Mandi Gate Pass. The goods were dispatched on 01.08.2024 and reached the outskirts of Badaun on 02.08.2024. However, due to traffic restrictions imposed by the District Administration during the "Shravan Kanwar Yatra", heavy vehicles were not allowed to enter the city, resulting in the truck being parked outside the city from 02.08.2024 to 05.08.2024. When restrictions eased, the truck resumed movement toward the purchaser's premises but was intercepted by the Mobile Squad and detained the vehicle on 05.08.2024. Upon inspection, all documents were found in order, and no discrepancy regarding quantity, quality, nature, or value of goods was noticed. The only issue was that the e-way bill had expired on 03.08.2024 and was not renewed. The authorities issued a show cause notice and, despite the petitioner's detailed reply explaining the delay with supporting documents, imposed a penalty of ₹24,88,320 under Section 129(3) of the CGST Act, 2017.

Assessee's Contention

The petitioner argued that all facts were undisputed and that the expiry of the e-way bill was solely due to the traffic restrictions during the "Kanwar Yatra". All documents, including invoices and e-way bills, had been generated and were in order, and there was no discrepancy found during inspection. The entire movement of goods was already known to the GST department, and no variation in quality, quantity, value, or nature of goods was detected. Therefore, there was no material available to form any satisfaction that the petitioner intended to evade tax. The petitioner argued that penalty under Section 129 requires the presence of intent to evade tax, as clarified by judgments of the Supreme Court and High Courts. In absence of any such intent or supporting material, the penalty imposed was unsustainable. The petitioner relied on decisions in Satyam Shivam Papers Pvt. Ltd., Globe Panel Industries India Pvt. Ltd., and other judgments asserting that mens rea is essential for imposition of penalty.

Department Contention

The Department contended that the e-way bill is valid only for a limited duration based on the distance of transportation. In this case, the e-way bill was valid until 03.08.2024, but during inspection on 05.08.2024, it had already expired, which was a clear violation of GST provisions. It was argued that the petitioner made no attempt to renew the e-way bill within the available window of eight hours or to generate a fresh e-way bill, indicating non-compliance with statutory requirements. The authorities had already considered the petitioner's explanation and rejected it, and therefore, the imposed penalty and the appellate order were justified and did not warrant interference.

Held

The Court held that the facts of the case were undisputed and that apart from the expiry of the e-way bill, there was no other discrepancy found in the goods or documents. It emphasized that imposition of penalty under Section 129 requires the authorities to form a satisfaction regarding the assessee's intent to evade tax. Relying on the Supreme Court judgment in Satyam Shivam Papers Pvt. Ltd. and decisions of coordinate benches such as Globe Panel Industries and Akhilesh Traders, the Court held that mens rea is essential for imposing such penalty. Since the authorities failed to produce any material indicating intent to evade tax and all documents were in order, the penalty order was unsustainable. Consequently, the Court set aside both the original penalty order dated 09.08.2024 and the appellate order dated 30.08.2024. The writ petition was allowed with no order as to costs.

BTA Remarks:

The lapse involved was purely unintentional in nature and did not result in any potential revenue loss, as all documents, invoices, and e-invoices were fully consistent and available at the time of inspection. The expiry of the e-way bill occurred solely due to traffic restrictions imposed by government authorities itself, a circumstance beyond the control of the petitioner. In such situations, the authorities are expected to consider genuine and unavoidable reasons rather than impose harsh penal consequences. Further, the absence of any recorded satisfaction regarding intent to evade tax indicates non-application of mind. Therefore, proportionality and fairness should guide enforcement actions under Section 129.

Case reference: SACHIN JAIN Vs STATE OF U.P. (2025) 36 Centax 300 (All.) [12-11-2025]- High Court of Judicature at Allahabad.

Author: Sneha Jhunjhunwala

Edited By: Saket Shaw