No Penalty for Goods Moved on Delivery Challan Without Sale | HC

Case Details: D and D Construction and Developers Company vs. Additional Commissioner - [2025] 173 taxmann.com 549 (Allahabad)

Judiciary and Counsel Details

• Piyush Agrawal, J.
• Suyash Agarwal, for the Petitioner.

Facts of the Case

The petitioner, a registered business entity, undertook the transfer of one old machine from its head office to its workplace located in the State of Uttar Pradesh for internal use. The said movement of goods was accompanied by a delivery challan as prescribed under the CGST Act. While the vehicle carrying the machine was in transit, it was intercepted by the tax authorities on the ground that the goods were being transported without an invoice. Despite the petitioner furnishing the delivery challan and other supporting documents, the authorities initiated proceedings under Section 129 of the CGST Act and the Uttar Pradesh GST Act. Thereafter, an impugned order was passed imposing penalty on the ground that the movement of goods without an invoice was in contravention of the law. The petitioner, aggrieved by the said order, filed a writ petition before the Allahabad High Court challenging the legality and sustainability of the detention and consequential penalty.

High Court Held

The Hon’ble Allahabad High Court held that the imposition of penalty on the petitioner was unsustainable in law. It observed that the delivery challan produced by the petitioner clearly indicated that the goods were being transferred from the head office to the workplace and that there was no element of sale involved in the transaction. The Court held that in the absence of any element of sale, no tax liability arose, and consequently, no tax evasion could be attributed to the petitioner. The Court quashed the impugned orders and directed that the amount deposited by the petitioner pursuant to the impugned order be refunded within one month.