E-way bill expiry alone cannot justify penalty where documents were valid and no intent to evade tax was shown.

Penalty under Section 129(3) of the Uttar Pradesh GST Act was held unsustainable where the goods were accompanied by invoice and e-way bill, the e-way bill had expired shortly before interception, and the only lapse was failure to extend it in time. The Court treated intention to evade tax as essential for penalty and accepted the explanation that vehicle breakdown caused the delay in transit. In the absence of material showing evasion, a mere technical breach was insufficient to justify penal action. The impugned orders were quashed and set aside.

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Issues: Whether penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 was sustainable when the e-way bill had expired shortly before interception, the goods were accompanied by invoice and e-way bill, and there was no material indicating intention to evade tax.

Analysis: The goods were found to be accompanied by the relevant documents and the explanation offered for the delay was that the vehicle had broken down, causing delay in transportation. The only lapse was non-extension of the e-way bill before expiry. In the circumstances, the authorities were required to consider whether the factual matrix disclosed any intention to evade tax. The Court held that mens rea for evasion is essential for imposing penalty and that a mere technical breach, without supporting material of evasion, cannot by itself justify action under Section 129(3).

Conclusion: The penalty was not sustainable and the impugned orders were quashed and set aside.

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