On 1 September 2025, the Allahabad High Court delivered a significant ruling in M/s Rakesh Plastic Furniture & Crockery Emporium v. State of U.P. & Others. The case dealt with the detention of goods and imposition of penalty under Section 129 of the CGST/UPGST Act, 2017, solely because the transporter failed to update the vehicle number in the e-way bill after a change of vehicle during transit.
The Court observed that since the goods matched the invoices (with proper serial numbers) and there was no discrepancy or evidence of intent to evade tax, the omission amounted only to a technical lapse. Accordingly, the detention and penalty orders were quashed, reinforcing the principle that procedural errors without mala fide intent cannot attract penal consequences under GST law.
Case Name & Date
- Parties: M/s Rakesh Plastic Furniture & Crockery Emporium (Petitioner) vs. State of U.P. & 2 Others
- Date of Judgment: 1 September 2025
Factual Background / Facts as per Reports
From the commentary and tax-law reporting sites:
- The transporter (petitioner) had goods being moved, accompanied by:
- A valid tax invoice (showing serial numbers for the electronic items)
- A valid e-way bill (initially)
- During transit, there was a change of vehicle (because the original vehicle became unavailable). However, the petitioner did not update the substituted vehicle number in the e-way bill.
- Upon interception/inspection by authorities, the goods matched the invoice and were consistent in nature and quantity. No discrepancy in goods vs invoice was found.
- The revenue (or the inspecting authority) invoked Section 129 (detention, seizure, and penalty) on the ground that the e-way bill did not show the updated vehicle number. The argument was that this omission (non-updation) amounted to a deficiency warranting penal action.
- The petitioner, in its defense, explained that:
- The change in vehicle was due to legitimate reasons (vehicle not available) and was from the very beginning disclosed.
- No mala fide intention or intent to evade tax existed.
- The goods, documents, and invoice fully matched, which indicates there was no tampering or misdeclaration.
Issues / Questions before the Court
From reports, the central issues the High Court dealt with were:
- Whether the mere non-updation of the substituted vehicle number in the e-way bill, without any discrepancy in goods/documentation, can justify detention/seizure under Section 129.
- Whether such procedural lapses (like failing to update the vehicle number) can, by themselves, give rise to a presumption of tax evasion or justify penal action under GST.
- Whether the authorities were justified in ignoring the petitioner’s explanation and treating the procedural omission as evidence of wrongdoing (or evasion).
- Whether the order of penalty and seizure should be quashed, and refunds (if any) ordered, when the underlying goods and invoices are in order.
Decision / Holding / Ratio
From the summaries:
- The High Court held that mere failure to update the e-way bill (vehicle number), in a situation where the goods and invoice fully matched, is only a technical lapse and is not sufficient to sustain detention or penalty under Section 129 in the absence of evidence of evasion.
- The court criticized the authorities for ignoring the explanation given by the petitioner and for treating the lapse as though it were proof of tax evasion.
- The impugned orders of seizure, detention, and penalty were quashed.
- The court also ordered that any amount deposited by the petitioner in respect of the penalty/seizure be refunded.
Thus, the court treated the non-updation as a procedural error, not a substantive defect, and insisted that mere non-compliance of procedure (without accompanying malafide or mismatch) cannot trigger the harsh consequences under Section 129.