No Mens Rea, No Section 129: Allahabad HC Holds Revenue Must Prove Intent to Evade Tax [Read Order]

The Allahabad High Court held that proceedings under Section 129 of the GST Act cannot be initiated unless the Revenue establishes a mens rea, an intention to evade tax. The Court quashed the penalty order and the appellate order, ruling that the mere expiry of an e-way bill, without any other adverse material, does not justify the imposition of penalty.

The petitioner, Kamla Machines, had purchased machinery parts from Honesty Machine Tools, Mumbai. The transaction was a recognized bill-to-ship model, in which the goods were billed to the petitioner but were to be delivered to Ojas Enterprises, Muzaffarnagar (U.P.). The goods, transported through vehicle, were accompanied by a valid tax invoice, GR, and an e-way bill. During transit, the truck driver fell seriously ill, causing a delay that resulted in expiry of the e-way bill.

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The Mobile Squad intercepted the vehicle. MOV-01, MOV-02, and MOV-06 were issued, though no mismatch was found between the transported goods and the accompanying documents. Despite the petitioner’s reply explaining the driver’s illness, an order under Section 129(3) imposing a penalty of ₹9,29,678 was passed and later affirmed by the Appellate Authority. The petitioner’s appeal was dismissed on 30.08.2025, prompting the present writ.

Suyash Agarwal, appearing for the petitioner argued that the transaction was a valid bill-to-ship supply supported by all statutory documents and recognized by the GST Commissioner’s Circular dated 17.01.2024. He submitted that the delay was unavoidable due to the driver’s medical condition and that no intention to evade tax could be attributed, especially since the movement of goods was fully traceable on the GST portal.

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He further placed reliance on the judgments in M/s Trimble Mobility Solutions India Pvt. Ltd. v. State of U.P. (2025) and A.A. Plastics Pvt. Ltd. v. Additional Commissioner (2024), which held that an expired e-way bill cannot, by itself, establish intention to evade tax.

The High Court bench of Justice Piyush Agrawal held that the bill-to-ship nature of the transaction was undisputed and that all documents including the tax invoice, e-way bill, and GR confirmed genuine movement of goods from Maharashtra to Muzaffarnagar. The Court noted that no adverse material was found and that the only ground for detention was the expiry of the e-way bill.

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The Court reiterated that the burden of proving intention to evade tax lies on the Revenue, and in the absence of any such material, Section 129 proceedings cannot be initiated. The driver’s illness was found to be a credible explanation for the delay.

Consequently, the Court quashed both impugned orders and allowed the writ petition in full.

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