Lucknow, June 2 -- In a significant judgment, the Allahabad High Court has ruled that GST authorities in Uttar Pradesh cannot impose penalties on goods that are merely passing through the state when both the origin and destination lie outside its jurisdiction.

The court set aside penalty orders issued against five petitioners, declaring them illegal and directing the immediate release of the seized goods and vehicles.

Court's Key Observations

A division bench of Justice Saumitra Dayal Singh and Justice Swaroopma Chaturvedi noted that allowing transit states to impose penalties would disrupt the free flow of goods across the country. Such actions, the court said, would violate the constitutional guarantee of free trade under Article 301...