22/07/2026
Hereโs whatโs important to understand โ 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:
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The transaction had no connection to UP โ it didnโt originate there, didnโt terminate there. UP was purely a transit state.
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The jurisdiction question โ if goods are merely passing through a state, that stateโs GST authority has no tax jurisdiction over the transaction at all.
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Whose fault was the missing e-invoice? โ Generating it was the supplierโs responsibility, not the buyerโs. One partyโs non-compliance cannot be used to penalize the other.
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Article 301 โ Freedom of trade and commerce โ 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 ownerโs favor โ 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 โ that state cannot stop you and impose a penalty. And a supplierโs compliance failure cannot be shifted onto the buyer.
GST compliance isnโt just about paperwork โ understanding jurisdiction and liability is just as critical.