22/07/2026
Here’s what’s important to understand — even with a valid e-way bill and invoice in hand, a penalty can still be imposed if the e-invoice is missing. But does that mean every transit state has the right to stop and penalize?
In this case:
✅ The transaction had no connection to UP — it didn’t originate there, didn’t terminate there. UP was purely a transit state.
✅ The jurisdiction question — if goods are merely passing through a state, that state’s GST authority has no tax jurisdiction over the transaction at all.
✅ Whose fault was the missing e-invoice? — Generating it was the supplier’s responsibility, not the buyer’s. One party’s non-compliance cannot be used to penalize the other.
✅ Article 301 — Freedom of trade and commerce — if every transit state could impose penalties this way, moving goods from Kerala to Kashmir would become practically impossible.
The Allahabad High Court ruled in the truck owner’s favor — the penalty was cancelled, holding that a transit state has no authority to stop or penalize goods merely passing through.
Takeaway: If your goods are only passing through a state with no purchase or sale happening there — that state cannot stop you and impose a penalty. And a supplier’s compliance failure cannot be shifted onto the buyer.
GST compliance isn’t just about paperwork — understanding jurisdiction and liability is just as critical.
