GSTAT Finds Goods Diversion Not Established by Sufficient Evidence:

Chemenergy Biofuels Limited filed an appeal before the GSTAT challenging the Order-in-Appeal dated 12 August 2025, by which the first appellate authority had upheld a penalty of Rs 7,20,674 imposed under Section 129(3) of the UPGST Act, 2017, read with Section 20 of the IGST Act, 2017.

The dispute arose on 18 August 2024, when a vehicle bearing registration number HR74B9944, carrying 33.930 metric tonnes of refined glycerine valued at Rs 23,62,207, was intercepted near the entrance of an industrial establishment in Kanpur Dehat. The goods were accompanied by Tax Invoice No. CBPL/24-25/709 dated 17 August 2024 and E-Way Bill No. 401470024501 dated 17 August 2024. The documents identified M/s Premier Chemicals as the bill-to party and M/s Govind Rashyan Udyog, Kolkata, as the ship-to party.

The department alleged that the vehicle was intended to unload the goods at the local factory rather than deliver them to the declared recipient in Kolkata. Proceedings under Section 129 followed, culminating in the penalty order dated 23 August 2024. The first appellate authority subsequently rejected the company’s appeal and upheld the penalty.

The Tribunal noted that the goods were accompanied by an invoice and e-way bill and that no discrepancy had been recorded in their description or quantity. These documents supported the appellant’s explanation that the transportation related to a disclosed commercial transaction.

The Tribunal observed that the mere presence of a vehicle near a factory entrance did not conclusively establish that the goods were intended to be delivered there. In the absence of evidence showing actual unloading, receipt of the goods by the alleged local recipient, or other independent material establishing the alleged diversion, the declared transaction could not be displaced merely on suspicion or an inference drawn from the vehicle’s location.

Accordingly, the GSTAT allowed the appeal filed by Chemenergy Biofuels Limited and set aside the penalty of Rs 7,20,674.