GST Update

Desk of CA. Praveen Sharma – 1050 Series (CAPS) 

 Allahabad High Court IN the CASE OF Maruti Enterprises v. State of U.P. & Another

Allahabad High Court: Transit State Cannot Levy GST Penalty Without Tax Incidence

In a significant judgment, the Allahabad High Court in Maruti Enterprises v. State of U.P. & Another held that a transit State cannot invoke Section 129 of the GST Act when no taxable transaction takes place within its territory.

The case involved transportation of goods from West Bengal to Delhi through Uttar Pradesh. The goods were accompanied by a valid Tax Invoice and E-Way Bill, and there was no allegation of fake documents or tax evasion.

The Court observed that Uttar Pradesh was only a transit State, and since no tax liability arose there, the State GST authorities had no jurisdiction to detain the goods or impose penalty under Section 129.

Accordingly, the Court quashed the detention and penalty orders and clarified that the power to inspect goods in transit does not automatically give the authority to levy tax or penalty where no taxable event exists within the State.

This judgment reinforces that GST enforcement powers must remain within the limits prescribed by law and cannot be exercised beyond territorial jurisdiction.

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CAPS