Misclassification alone cannot justify GST detention penalty when transport documents are in order and goods match the invoice.

Penalty and detention under the Uttar Pradesh GST regime were unsustainable where the consignment was accompanied by the tax invoice, e-way bill and builty, and no discrepancy in quality or quantity was found. The action rested only on alleged misclassification of goods, and the court treated such speculative misclassification or undervaluation as insufficient to attract penalty under section 129. The detention and penalty orders were therefore quashed, and refund of any amount deposited was directed in accordance with law.

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Issues: Whether penalty and detention orders could be sustained where the goods were accompanied by the tax invoice, e-way bill and builty, there was no discrepancy in quality or quantity, and the action was based only on alleged misclassification of goods.

Analysis: The record showed that the goods were intercepted during transit, but the relevant documents accompanied the consignment at the time of detention and seizure. There was no dispute regarding the quality or quantity of the goods. The impugned action rested only on alleged misclassification. In such circumstances, the governing principle applied was that penalty under section 129 cannot be imposed on mere speculative grounds of misclassification or undervaluation.

Conclusion: The detention and penalty orders were not sustainable and were liable to be quashed, with refund of any amount deposited in accordance with law.

Final Conclusion: The petitioner obtained complete relief against the detention and penalty action.

Ratio Decidendi: Penalty under section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 cannot be sustained merely on alleged misclassification when the statutory transport documents are in order and no discrepancy in the goods is found.

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