In a significant relief to transporters and a major clarification on the scope of GST enforcement, the Allahabad High Court has held that when the ownership of goods is clearly established with the consignor, liability for transit-related discrepancies cannot be imposed on the transporter.
The ruling came while the Court quashed seizure and penalty proceedings initiated under Section 129(3) of the GST Act against a petitioner-transporter, observing that authorities had failed to record any finding of intent to evade tax — a mandatory requirement before invoking penal provisions.
The bench noted that mere procedural or technical irregularities during transit cannot be grounds for imposing penalties, particularly when valid documents such as invoices and e-way bills accompany the goods and ownership remains undisputed with the consignor.
“The GST law does not envisage penalising a transporter in cases where the ownership and responsibility for the goods lie elsewhere, unless there is material to demonstrate evasion,” the Court observed.
The Court’s order directs authorities to drop all proceedings and release the seized goods, further emphasizing that imposition of penalty without substantive evidence of evasion constitutes overreach.
Legal experts say the ruling reinforces judicial insistence that Section 129 proceedings cannot be applied mechanically and that the element of mens rea — intent to evade — must be established. The decision is expected to have far-reaching implications for transporters frequently facing detention and penalties due to clerical or minor documentation issues.
The judgment adds to a growing body of GST-era jurisprudence demanding proportionality and fairness in enforcement actions, especially in logistics and supply-chain operations.