Interim Release of Perishable Goods and Vehicle: Balancing Revenue and Business Continuity

This ruling (delivered in March 2026) by the Orissa High Court addresses a common crisis in logistics: the detention of goods due to technical failures in generating an E-way bill. The Court provided a middle path, ensuring the government’s tax interest is secured while preventing the total loss of perishable inventory.

The Legal Conflict: Section 129(1)(a) vs. Section 129(1)(b)

The Core Issue:

The Department treated the driver as the “person in charge” and imposed a penalty on the premise that the owner had not come forward. Under Section 129, the penalty amount significantly differs depending on whether the owner comes forward:

Section 129(1)(a): If the owner comes forward, the penalty is 200% of the tax payable.
Section 129(1)(b): If the owner does not come forward, the penalty is 50% of the value of the goods or 200% of the tax, whichever is higher (often a much larger sum).

Facts of the Case

The Transit: Areca nut chura (dust) was being transported from Nagpur to Patna.
The Default: Due to “technical glitches,” the driver proceeded with the vehicle without a valid E-way bill and invoice.
The Detention: The vehicle was intercepted in Odisha. The Department issued the penalty order in the driver’s name, claiming the owner was untraceable.
The Petitioner’s Plea: The actual owner (consignor) moved the Court, asserting they were ready to pay the dues. They highlighted that the goods were perishable and the vehicle was suffering from corrosion due to being parked in an open yard.

The Decision: Conditional Interim Release

The High Court allowed a partial victory for the assessee by ordering the release of the vehicle and goods subject to specific financial conditions:

Deposit Requirement: The petitioner was directed to deposit an amount equal to the penalty prescribed under Section 129(1)(a) (calculated on the tax payable as per the invoice). This deposit must be made within two weeks.
Immediate Release: Upon proof of deposit and a formal acknowledgment, the Department was ordered to release the vehicle and the goods “forthwith.”
The Undertaking: The petitioner had to provide a formal undertaking to the Department to satisfy any further liability if the main Writ Petition eventually failed.
Protection of Rights: If the petitioner eventually wins the legal challenge against the detention, the Department is liable to refund the deposit with interest from the date of payment.

Key Takeaways for Consignors and Transporters

Owner Identification: Always ensure the consignor or consignee formally approaches the authorities immediately after detention. This ensures the case is handled under the (relatively) lower penalty bracket of Section 129(1)(a) rather than the harsher (1)(b) bracket.
Perishable Goods Argument: If your cargo is perishable (food, chemicals, agriculture), use this as a primary ground for seeking an urgent interim stay or release. Courts are generally sympathetic to preventing the “waste” of national assets.
Technical Glitch Defense: While a technical glitch is a valid practical excuse, it does not legally exempt you from the requirement of an E-way bill. Use it to argue for “bonafide conduct” to avoid the harsher “confiscation” proceedings under Section 130.

Summary of Release Conditions

Category: Interim Release pending final Writ outcome.
Payment: 100% of the penalty amount as per Section 129(1)(a).
Timeline: 2 Weeks to deposit; immediate release after deposit.
Liability: Secured by a personal undertaking for the balance, if any.

HIGH COURT OF ORISSA

Gopal Enterprises

Chief Commissioner of Commercial Tax and GST^*

HARISH TANDON, CJ.
and MURAHARI SRI RAMAN, J.

W.P. (C) No. 5420 of 2026

FEBRUARY 23, 2026

Rudra Prasad Kar, Sr. Adv. and Jitendra Kumar Palei, Adv. for the Petitioner. Sunil Mishra, Standing Counsel for the Respondent.

ORDER

W.P. (C) No. 5420 of2026 and I.A. No. 3317 of 2026

1. It is the case of the petitioner, the Consignor and owner/supplier of the goods, that since opposite party no.3-Consignee had ordered for supply of goods, it delivered the goods, i.e., “Areca Nut Chura (Dust)” containing 27,550 Kgs. amounting to Rs.60,74,775/- on 20^th January, 2026, to Transporter-“Saawariya Cargo Movers” for delivery of goods to said opposite party no.3-Consignee of Patna bearing GSTN: 10CXZPV7593K1ZA and, accordingly, Tax Invoice has been prepared disclosing such fact. The goods were expected to be transported from Nagpur to be delivered in Patna by the Transporter.

1.1. Due to technical glitches and mis-communication between the petitioner and the Transporter, driver engaged by the Transporter went for delivery of the goods to opposite party no.3-Consignee along with all the documents except e-way bill since the petitioner is engaged in both wholesale and retail business. The petitioner depends on its accountant who looks after the preparation of Tax Invoice and making compliance of statutory requirements.

1.2. Due to the difficulty faced by the petitioner in generating e-way bill, the petitioner could not be able to make the e-way bill available with the Transporter. The petitioner was informed by the consignee and the transporter that the goods along with the vehicle bearing Registration No.OD-15-W-1994 has been detained by opposite party no.2 and an order imposing penalty has been passed in the name of the driver of the opposite party no.3 on 30^th January, 2026 under Section 129(1)(b) of the Odisha Goods and Services Tax Act, 2017 (for short the “OGST Act”).

1.3. The petitioner for the first time came to know about the aforesaid order dated 30^th January, 2026, on 5^th February, 2026 when the Consignee and the Transporter intimated about the above facts to the petitioner. Thereafter, the petitioner enquired from the Transport Agencies and the Consignee about the proceeding initiated by opposite party no.2 and came to know that the opposite party no.2 on 23^rd January, 2026 has detained the consignment and passed the order under Section 129(1)(b) of the OGST Act, wherein 100% of the amount of goods has been imposed as penalty on the driver

1.4. On further enquiry, the petitioner could be able to lay hands on the order dated 30^th January, 2026 and noticed that opposite party no.2 detained the vehicle of the petitioner on 23^rd January, 2026 loaded with the goods. It could be ascertained that the opposite party no.2 alleged that the driver has not submitted any document at the time of inspection, such as, invoice and e-way bill. Since it is alleged that the opposite party no.2 on its own determined the value of the goods as Rs.1,10,20,000/- and imposed penalty under Section 129(1)(b) of the OGST Act as the owner did not come forward. The impugned order, therefore, has been passed against the name of the driver of the vehicle.

2. Mr. Rudra Prasad Kar, learned Senior Advocate submits that the petitioner-consignor, being the owner of the goods and was very much available, and though it was within the knowledge of the authority concerned, without issuing notice in his name, the vehicle in question along with the goods has been detained by opposite party no.2. Consequently, the impugned order has come to be passed by imposing penalty on the driver of the alleged vehicle. He arduously submitted that the impugned order being passed in violation of the principles of the natural justice, the petitioner is entitled to the reliefs sought for.

2.1. He further submits that since the goods are perishable in nature, the goods and the vehicle are to be released.

3. The issue raised by the learned Senior Advocate that when the details of the owner of goods are within the knowledge of the CT&GST Organisation, there was no occasion for the authority concerned to detain the vehicle along with the goods ignoring to serve notice on the owner and, thereby the imposition of penalty by determining value of goods arbitrarily under Section 129(1)(b) of the GST Act is vitiated inasmuch as non-compliance of rules of natural justice would result in impugned order liable to be set aside. The issue requires consideration. Issue notice to the opposite parties.

4. Mr. Sunil Mishra, learned Standing Counsel for CT & GST Organization appears and waives service of notice on behalf of the opposite parties.

5. Considering the submission of the learned Senior Counsel that the goods are perishable and the vehicle is subject to corrosion as the same is put under the open sky, this Court directs the petitioner to deposit an amount equivalent to penalty calculated in terms of Section 129(1)(a) of the GST Act, as amended by virtue of the Finance Act, 2021 on the tax payable as reflected in the tax invoice(s) within a period of two weeks from date. In the event of such deposit being made, the vehicle bearing registration No.OD-15-W-1994 along with the goods shall be released forthwith by opposite party no.2/authorized officer on proper acknowledge/identification. It is further directed that the petitioner shall furnish an undertaking that in the event the writ application fails, he shall be bound to discharge the liability as per the order dated 30.01.2026. It is made clear that in case the writ petition succeeds, the petitioner shall be entitled to not only refund of the amount so deposited, but also interest at the rate stipulated by the Court at the final disposal of the matter from the date of deposit till actual payment.

6. List this matter on 9^th March, 2026. Counter affidavit, if any, shall be filed in the meantime.