BackgroundFor April 2020–March 2021, a mismatch between GSTR-3B and the returns led the department to treat Rs. 1,00,408 each of CGST and SGST (Rs. 2,00,816 in total) as excess ITC under Section 73, with no allegation of fraud or suppression. The First Appellate Authority upheld it, reasoning under Section 16(2)(c) that ITC is available only under the head in which tax was deposited. The question of law referred was the treatment of ITC misreported across heads without exceeding aggregate eligibility.Final VerdictApplying the Kerala High Court Division Bench in Rejimon Padickapparambil Alex v. UOI (W.A. 54/2024) and CBIC Circular No. 192/04/2023-GST, which treat the electronic credit ledger as a single pool or “wallet” of IGST, CGST and SGST, the Tribunal held that the demand cannot be sustained merely because credit was reflected under an incorrect tax head, since the department had not established actual loss of revenue or availment beyond aggregate entitlement and the eligibility of the credit was not disputed. With the principal demand unsustainable, interest and penalty could not survive independently. However, as neither lower authority had verified from the ledger and returns that matching IGST credit was available and unclaimed, the appeal was allowed with a direction that the proper officer verify sufficient eligible IGST credit and drop the demand if the IGST credit stands unclaimed, with consequential relief including restoration or adjustment of ITC.
Lucknow Test House v. Additional Commissioner Grade-II, State Tax, Lucknow & Ors. 27-08-2026
BackgroundFor April 2020–March 2021, a mismatch between GSTR-3B and the returns led the department to treat Rs. 1,00,408 each of CGST and SGST (Rs. 2,00,816 in total) as excess ITC under Section 73, with no allegation of fraud or suppression. The First Appellate Authority upheld it, reasoning under Section 16(2)(c) that ITC is available only under the head in which tax was deposited. The question of law referred was the treatment of ITC misreported across heads without exceeding aggregate eligibility.Final VerdictApplying the Kerala High Court Division Bench in Rejimon Padickapparambil Alex v. UOI (W.A. 54/2024) and CBIC Circular No. 192/04/2023-GST, which treat the electronic credit ledger as a single pool or “wallet” of IGST, CGST and SGST, the Tribunal held that the demand cannot be sustained merely because credit was reflected under an incorrect tax head, since the department had not established actual loss of revenue or availment beyond aggregate entitlement and the eligibility of the credit was not disputed. With the principal demand unsustainable, interest and penalty could not survive independently. However, as neither lower authority had verified from the ledger and returns that matching IGST credit was available and unclaimed, the appeal was allowed with a direction that the proper officer verify sufficient eligible IGST credit and drop the demand if the IGST credit stands unclaimed, with consequential relief including restoration or adjustment of ITC.
BackgroundOn 27.03.2018 the Mobile Squad, Bareilly intercepted iron goods moving under Tax Invoice No. 29 without an e-way bill, and tax of Rs. 47,844 with equal penalty was imposed under Section 129(3). The First Appellate Authority set it aside (24.09.2021), relying on later production of the e-way bill and documents. Revenue appealed, contending that the violation of Rule 138 was not cured afterwards. The respondent did not appear.Final VerdictHolding that the e-way bill under Rule 138(1) is an integral part of the statutory mechanism, the Tribunal distinguished the High Court precedents relied upon below (Singh Tyre, KL Industries, Harley Foods, Modern Traders, Rai Prexim). Because the e-way bill is generated online while the invoice is manual, transporting goods without an e-way bill was held to be substantive non-compliance establishing an intention to evade tax, reinforced by the short Baheri (UP)–Kichha (Uttarakhand) route. Referring to its own order of 20.08.2026 in Om Prakash v. Islam Trading Co., which involved the same dealer, goods, destination and modus operandi, the Tribunal held that the repeated lapse, with the e-way bill surfacing only after interception, was a deliberate course of conduct and not a mere technical lapse. Revenue’s appeal was allowed, the appellate order set aside and the original order of 09.03.2018 under Section 129(3) restored.
Santosh Mani Mishra (Revenue) v. M/s Islam Trading Company, Baheri, Bareilly 25-08-2026
BackgroundOn 27.03.2018 the Mobile Squad, Bareilly intercepted iron goods moving under Tax Invoice No. 29 without an e-way bill, and tax of Rs. 47,844 with equal penalty was imposed under Section 129(3). The First Appellate Authority set it aside (24.09.2021), relying on later production of the e-way bill and documents. Revenue appealed, contending that the violation of Rule 138 was not cured afterwards. The respondent did not appear.Final VerdictHolding that the e-way bill under Rule 138(1) is an integral part of the statutory mechanism, the Tribunal distinguished the High Court precedents relied upon below (Singh Tyre, KL Industries, Harley Foods, Modern Traders, Rai Prexim). Because the e-way bill is generated online while the invoice is manual, transporting goods without an e-way bill was held to be substantive non-compliance establishing an intention to evade tax, reinforced by the short Baheri (UP)–Kichha (Uttarakhand) route. Referring to its own order of 20.08.2026 in Om Prakash v. Islam Trading Co., which involved the same dealer, goods, destination and modus operandi, the Tribunal held that the repeated lapse, with the e-way bill surfacing only after interception, was a deliberate course of conduct and not a mere technical lapse. Revenue’s appeal was allowed, the appellate order set aside and the original order of 09.03.2018 under Section 129(3) restored.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
BackgroundThe appellant, a dealer in motorcycles and spares, had its vehicle carrying motorcycles under four invoices intercepted by the Mobile Squad, Gonda at 7:25 A.M. on 20.01.2025; the e-way bill was generated at 7:34 A.M. and produced immediately. Penalty of Rs. 2,63,330 (CGST + SGST) was imposed under Section 129(3) and confirmed by the First Appellate Authority. The question referred to the Division Bench was whether movement without an e-way bill (mandatory under Rule 138(1)) justified penalty on these facts.Final VerdictThe Tribunal accepted that generation of the e-way bill after interception was a procedural lapse, but found that it occurred in a genuine and fully identifiable transaction: the motorcycles carried engine and chassis numbers and were subject to RTO registration, the movement was backed by purchase/sale invoices, challans, ledgers and bank records, and no discrepancy in quantity, value or classification, nor any suppression, undervaluation, fake documentation or clandestine movement, was found. Relying on the Allahabad High Court in M/s OSR Creation (and Uttam Electric Store, Vishnu Singh), the Tribunal held that the lapse was a bona fide procedural one and not part of an attempt to evade tax, so penalty under Section 129(3) could not be sustained; the department’s reliance on M.B. Computers was distinguished as involving unfilled Part-B and a different destination. The order under Section 129(3) and the appellate order were set aside and the deposited Rs. 2,63,330 was directed to be refunded subject to verification.
