Lesser Penalty Imposed for Technical E-Way Bill Lapse in Proven

Lesser Penalty Imposed for Technical E-Way Bill Lapse in Proven Export Case

Issue

Whether full penalty under Section 129 of the CGST/TNGST Act and denial of export incentives are justified for transporting goods without an E-Way Bill and E-Invoice when the goods are demonstrably exported without an intention to evade tax.

Facts

Background: The petitioner-assessee is an exporter engaged in the export of coir products.
Transit Defect: Goods were transported solely on the strength of a commercial invoice, without generating the mandatory E-Invoice and E-Way Bill.
Intervention: Revenue authorities detained the goods and conveyance in transit under Section 129 for non-production of valid transport documents.
Proproved Export: Despite the documentation lapse during transit, the assessee established that the goods were ultimately and genuinely exported.

Decision

Breach Confirmed: Held that the assessee violated the procedural requirements prescribed under Section 129 of the Act.
Technical/Venial Lapse: Relying on the Supreme Court precedent in Hindustan Steel Ltd. v. State of Orissa, held that export incentives cannot be denied nor extreme penalties imposed for technical and venial breaches lacking mens rea or intent to evade tax.
Reduced Penalty: Held that a reduced penalty of ₹25,000 is appropriate, with respondents directed to appropriate this amount from the sum already paid by the assessee.

Key Takeaways

Substance Over Technicality for Exports: Genuine export transactions backed by commercial proof will not lose statutory export benefits due to procedural transit omissions like missing E-Way Bills.
Mens Rea and Proportionate Penalty: In the absence of an intent to evade tax (mens rea), technical infractions under Section 129 warrant a nominal/lesser penalty rather than maximum statutory detentions.
Application of Hindustan Steel Rule: The landmark principles of Hindustan Steel Ltd. protect assessees from harsh, oppressive penalties when statutory non-compliance is purely administrative or accidental.

HIGH COURT OF MADRAS

Athiyan Exports

State Tax Officer, Tirunelveli

C. Saravanan, J.

W.P.(MD) No.16265 of 2025
W.M.P.(MD) No.12353 of 2023

JUNE 18, 2025

A. Mohamed Ismail for the Petitioner. R.Suresh Kumar, Additional Government Pleader for the Respondent.

ORDER

1. This Writ Petition is disposed of at the time of admission, after hearing the learned counsel for the petitioner and Additional Government Pleader for the respondents.

2. The petitioner is before this Court against the impugned order in Form GST MOV-09, dated 09.05.2025 passed under Section 129(3) of the respective GST enactments.

3. By the impugned order, it has been held that the petitioner has voluntarily paid the payment of penalty of Rs.2,71,458/- vide DRC 03, dated 09.05.2025. Since the amount has been paid voluntarily, there is no question of dropping of penalty proceedings initiating against the petitioner, pursuant to the Show Cause Notice, dated 07.05.2025. Operative portion of the impugned order reads as under:

4. The brief facts of the case of the petitioner is that the petitioner is an exporter of coir product and pursuant to the export order from the buyer abroad, they had proposed to export the product to Sapphire Premium (Shenzhen) Technology Co. Ltd., China.

5. It is further case of the petitioner that the petitioner was required to generate E-Invoice before transporting the goods from the place of manufacturing for the product exported. However, without generating E-Invoice, the goods were transported on the strength of Commercial invoice, dated 02.05.2025. The value of the export consignment was approximately 34,920 USD for 72 M.T of Cocochips-Washed-8 to 20 mm. The consignments were transported without generating E-Invoice and E-Way Bills in the following three vehicles:

S.No.	Vehicle/Trans Doc.No & Dt
1.	TN-88-C-6067 & AE019 & 02.05.2025
2.	TN-88—C—2155 & AE019 & 02.05.2025
3.	TN-88-BD-9978 & AE019 & 02.05.2025

6. It is submitted that on the strength of the Commercial invoice in AE-019, dated 02.05.2025, two of the consignments reached the port, without being detected all the defects in the export procedure adopted by the petitioner, i.e., transportation of the goods without generating E-Way Bill and E-Invoice. However, the consignment covered by the transport vehicle in TN-88-C-2155 was intercepted by the respondents in terms of Section 129 of the respective GST enactments and therefore, notice was issued to the petitioner in Form GST MOV -07 dated 07.05.2025 in O.R.53/2025-26. Since the petitioner was in a hurry to have the consignment exported, the petitioner appears to have generated a supplementary invoice, namely, invoice in AE-021, dated 09.05.2025 after the seizure was made.

7. It is further submitted that since the petitioner paid the amount, the goods were released. Now, the petitioner is before this Court challenging the impugned order stating that although the petitioner has violated Section 129 of the respective GST enactments, the export incentives cannot be denied, as per the condition under Section 129 of the respective GST enactments. However, entire export incentives wiped off by the impugned order. Therefore, making export incentives illusory.

8. It is further submitted that the petitioner had no intention to evade the tax as the goods covered by original Commercial Invoice in AE-019 for 72 MT Cocochips-Washed-8 to 20 mm was intended to export to the buyer in China and that two consignments covered by two transport vehicles were exported and the third alone was intercepted. It is also to be exported subsequently, vide shipping bill No.1659113, dated 09.05.2025 for the balance of 10735.47 M.T to the buyer in China.

9. The learned Additional Government Pleader for the respondents, on the other hand, submits that the petitioner has, at best, an alternate remedy under Section 107 of the respective GST enactments.

10. That apart, it is submitted that there is an estoppel operating against the petitioner in terms of Section 129(5) of the respective GST enactments. Therefore, this Writ Petition is liable to be dismissed as the petitioner has accepted the penalty that was levied from the petitioner after seizure was effected on 09.05.2025.

11. The learned Additional Government Pleader for the respondents has also drawn attention to the decision of this Court rendered in following two cases:

1. Pulkit Metals Private Ltd. v. State Tax Officer [Pulkit Metals Private Ltd. v. State Tax Officer [W.P.No.26145 of 2022, dated 29.11.2024] /W.P.No.26145 of 2022, dated 29.11.2024];

2. Aqua Excel v. State Tax Officer 92 GSTL 276 (Madras)/Aqua Excel v. State Tax Officer (Adjudication) 92 GSTL 276 (Madras)/W.P.(MD) No.22557 of 2024, dated 03.10.2024).

12. I have considered the arguments advanced by the learned counsel for the petitioner and learned Additional Government Pleader for the respondents.

13. The facts are not disputed that the petitioner had violated the conditions prescribed under Section 129 of the respective GST enactments. Therefore, the petitioner was indeed liable to be proceeded under Section 129 of the respective GST enactments and however, the question is as to whether the penalty that is imposed is to be justified or lesser penalty is to be imposed.

14. This Court in W.P.(MD) No.26145 of 2022, in its order, dated 29.11.2024 in the case of Pulkit Metals Private Ltd., (cited supra), particularly, in para 5, the scope of Section 129 of the respective GST enactments was discussed and decided as follows:

“5. Section 129 of the respective GST enactments states that notwithstanding anything contained in the Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released-

129. Detention, seizure and release of goods and conveyances in transit
(a) On payment of penalty equal to two hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;	(a). (b) on payment of penalty equal to fifty per cent of the value of the goods or two hundred per cent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees,whichever is less, where the owner of the goods does not come forward for payment of such penalty;	(a). (b). (c) Upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be

15. Reading of the above provision indicates that lesser penalty can be imposed. Considering the fact that there is no dispute that the petitioner has indeed exported the goods, I am of the view that the export incentive cannot be denied for technical and venial breach of provisions of Section 129 of the respective GST enactments as held by the Hon’ble Supreme Court in Hindustan Steel Ltd v. State of Orissa Hindustan Steel Ltd v. State of Orissa (1969) 2 SCC 627.

16. Under these circumstances, although the petitioner has an alternate remedy, this Court is of the view that there is no point in relegating petitioner to work out its remedy by the Appellate Authority under Section 107 of the respective GST enactments, as export incentives are not to be denied, although there may be certain technical and venial breach by exporter.

17. Accordingly, this Writ Petition is allowed, by directing the respondents to appropriate Rs.25,000/- itself from the amount that was already paid by the petitioner and to allow the petitioner to adjust the balance amount against the future tax liability of the petitioner. No costs. Consequently, connected miscellaneous petition is closed.