GSTAT Holds Route Deviation Alone Cannot Prove Tax Evasion:

The dispute arose when a consignment destined for Ludhiana, Punjab, was intercepted near Lahariya Oil Company in Kanpur Dehat. The department alleged that the vehicle had deviated from its declared route and relied on the driver's statement to conclude that the goods were intended to be delivered to an undeclared local buyer. The First Appellate Authority had upheld the penalty, holding that the interception location and the driver's statement indicated an attempt to evade tax through improper documentation. It rejected the appellant's explanation that the vehicle had stopped temporarily and sustained the penalty imposed through the MOV-09 order dated 23 August 2024. The appellate order was dated 20 November 2025.

The Tribunal, however, noted that the department's own DRC-07 reflected Punjab as the place of supply and that the consignment was accompanied by valid tax invoices and an e-way bill. It found that the deviation from the declared route, without sufficient evidence of a statutory contravention or an intention to evade tax, could not by itself justify the imposition of a penalty under Section 129.

Accordingly, the Tribunal allowed the appeal and set aside both the penalty order dated 23 August 2024 and the appellate order dated 20 November 2025. It further directed that the deposited penalty be refunded in accordance with law, subject to verification.