Judicial Corner : No penalty under sec. 129 of UPGST Act on mere speculation of undervaluation detention order quashed. (12.08.2025)

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No penalty under sec. 129 of UPGST Act on mere speculation of undervaluation detention order quashed { Tirupati Agro Commodities V/s State of U.P. (2025) 32 Centax 435 (All.) – Allahabad High Court }

Facts

  • A truck carrying goods was stopped, and the authorities detained the goods under Section 129 of the UPGST Act.
  • The reason given was “misclassification of goods”  basically, they said the goods were put under the wrong GST category.
  • All relevant documents (invoice, e-way bill, etc.) were present, and there was no dispute about the value of the goods.

Issue

  • Can a penalty under Section 129(3) of the UPGST Act be imposed just because of a dispute in classification, without any clear evidence of undervaluation or tax evasion?

Held

  • No  penalty under Section 129 can’t be imposed on mere speculation of undervaluation or on classification disputes.
  • If the authorities suspect undervaluation or wrong classification, they must use Section 73 or Section 74 of the Act (proper adjudication process), not Section 129 (which is for transport without proper documents, etc.).
  • Since documents were complete and there was no proof of undervaluation, the penalty was without legal basis.
  • Result: Detention order and penalty were quashed (cancelled).