Decided 28 September 2026. The Lucknow Bench of GSTAT has set aside a penalty of Rs 63,72,000 under section 129 imposed because machinery was transported with a manual tax invoice without an IRN or QR code, though the e-way bill and lorry receipt were present and the e-invoice was generated two days after interception. With no discrepancy and no evidence of evasion, the lapse did not justify the penalty.
Case at a glance
| Case | M/s VLM Group v. Additional Commissioner, Grade-II (Appeal)-3rd, State Tax, Kanpur & Ors. |
| Forum | GSTAT, Lucknow Bench, Court I |
| Appeal No. | APL/98/LCK/2026 |
| Date of order | 28 September 2026 |
| Penalty | Rs 63,72,000 (200% of IGST of Rs 31,86,000) |
| Result | Appeal allowed; amount deposited to be dealt with as per law after verification |
Facts of the case
The appellant, a Maharashtra firm, sent four FFS machines worth Rs 2,08,86,000 (including IGST) to a buyer in Barabanki under invoice 26-24/25, e-way bill and TCI Express LR, all dated 03.10.2024.
The vehicle was intercepted on 06.10.2024. The invoice had no IRN/QR code under Rule 48(4). The e-invoice was generated on 08.10.2024. A penalty of Rs 63,72,000 was imposed on 10.10.2024 and paid for release. The first appeal was dismissed ex parte.
Issue before the Tribunal
Does moving goods with a valid tax invoice and e-way bill but without a pre-generated e-invoice justify a 200% penalty under section 129?
What the Tribunal held
- The movement was fully documented: invoice, e-way bill and LR identified the supplier, buyer, goods, value and tax. The department did not allege fake documents, mismatch of goods or a fictitious party.
- The e-invoice was generated after interception but before the proceedings concluded; the department did not show it related to a different transaction.
- Following the Allahabad High Court in Nancy Trading Company and the Division Bench in Kumar Cargo Solution, and Hindustan Herbal Cosmetics, penalty under section 129 is not justified without a finding of intent to evade.
- Paying the penalty to release goods is not an admission. Applying Hindustan Steel, a technical or venial breach does not attract penalty. The appellate order was set aside.
Practical takeaways for taxpayers
- Generate the e-invoice before goods move if you are covered by e-invoicing; it remains mandatory.
- If intercepted for a missing IRN, generate the e-invoice promptly and show that all other documents tally.
- Penalty under section 129 can be challenged where there is no discrepancy in goods, value or parties.
Frequently asked questions
Is penalty under section 129 automatic if the e-invoice was not generated?
No. GSTAT Lucknow held that without evidence of intent to evade, penalty is not justified when other documents are valid.
Does paying the penalty for release mean accepting it?
No. The Tribunal held payment to release goods is not an admission of evasion.
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This summary is based on the order of the GST Appellate Tribunal, Lucknow Bench (Court I) in Appeal No. APL/98/LCK/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.