GST Penalty Quashed – HC Sets Aside Section 129 Order

Case Details: Shekhar Kumar @ Shekhar Bagaria vs. State of West Bengal - [2025] 174 taxmann.com 180 (Calcutta)

Judiciary and Counsel Details

• Hiranmay Bhattacharyya, J.
• Dhiraj Lakhotia, Ms Radhika Agarwal, Ms Meghana Joshi & Ms Khushi Kundu, Advs. for the Petitioner.
• Joyjit Choudhury, Ld.AAG & Ms Rima Sarkar, Advs. for the Respondent.

Facts of the Case

The petitioner, a goods transporter, had its conveyance carrying goods detained on the ground that the person in charge failed to produce the tax invoice relating to the movement of goods at the time of inspection. Pursuant to the detention, an order of detention was issued, and a show cause notice proposing levy of penalty under Section 129 of the CGST Act was served on the petitioner.

The petitioner contested the penalty before the adjudicating authority; however, the penalty order was confirmed. Subsequently, the petitioner filed an appeal before the Appellate Authority, which was dismissed, affirming the penalty. The petitioner thereafter filed a writ petition challenging the appellate order. It was undisputed that the petitioner produced a valid e-way bill at the time of inspection and the revenue did not dispute the accuracy or quantity of the goods described therein. Moreover, a copy of the tax invoice was attached with the petition, and its veracity was never questioned or challenged by the revenue. The appellate order did not contain any finding indicating an intention on the part of the petitioner to evade tax.

High Court Held

The Hon’ble High Court held that the penalty imposed under Section 129 of the CGST Act was unjustified in light of the fact that the valid e-way bill was produced during the inspection and there was no discrepancy as to the quality or quantity of goods transported. The Court observed that the revenue’s failure to dispute the authenticity of the tax invoice or to establish any intention of tax evasion negated the basis for detention and penalty. Accordingly, the appellate order affirming the penalty was set aside, and the petitioner was granted liberty to seek refund of the penalty already paid.

List of Cases Referred to

• Joint CCTes (Appeals)-3, Bengaluru v. Transways India Transport [2024] 164 taxmann.com 673 (Karnataka) (para 7).