Penalty under Section 129(1)(a) applies when owner is identified; Section 129(1)(b) invoked erroneously
Issue
Whether the penalty for goods detained due to the absence of an E-way bill should be calculated under Section 129(1)(a) (where the owner comes forward) or Section 129(1)(b) (where the owner does not come forward), given that the goods were accompanied by a valid tax invoice identifying the registered owner.
Facts
The Lapse: Goods were intercepted in transit without an accompanying E-way bill.
The Documents: While the E-way bill was missing, the goods were accompanied by a valid Tax Invoice.
Owner Identification: The tax invoice disclosed the full particulars of the owner, who was a registered dealer. Thus, the identity of the owner was established and not in dispute.
Authority’s Action: Despite the owner being identified, the Adjudicating Authority calculated the penalty under Section 129(1)(b).
Note: Section 129(1)(b) is typically harsher as it applies to cases where the owner does not come forward, often calculating penalty based on the value of goods (50% of value less tax paid) rather than just the tax amount.
Decision
Owner “Comes Forward”: The High Court held that since the tax invoice was present and clearly identified the registered owner, the owner is deemed to have come forward.
Correct Provision: In such a scenario, the statute mandates that the penalty must be determined under Section 129(1)(a).
Section 129(1)(a): Penalty = 200% of the tax payable.
Section 129(1)(b): Penalty = 50% of the value of goods or 200% of tax (whichever is higher).
Error in Law: The application of Section 129(1)(b) by the Authority was legally erroneous as it ignored the presence of the owner.
Ruling: The impugned order was set aside. The Authority was directed to re-determine the penalty strictly in accordance with Section 129(1)(a).
Key Takeaways
(a) vs (b) Distinction: The specific penalty clause depends entirely on whether the owner comes forward:
Clause (a): Owner claims goods $\rightarrow$ Penalty is 200% of Tax.
- Clause (b): Owner does not claim goods $\rightarrow$ Penalty is 50% of Value (less tax paid).
- The difference in financial impact is massive. If your invoice accompanies the goods, always insist on Clause (a).