Vehicle Detention Under Section 129 Invalid: No Movement of Goods, Only E-Way Bill Found Without Corresponding Supply

Vehicle Detention Under Section 129 Invalid: No Movement of Goods, Only E-Way Bill Found Without Corresponding Supply

Issue:

Whether a vehicle can be detained and penalized under Section 129 of the Central Goods and Services Tax Act, 2017 (CGST Act), solely on the ground that its driver was in possession of an e-way bill without any corresponding movement of goods, when the primary ingredient for Section 129 (i.e., transportation of goods in contravention of provisions) is absent.

Facts:

The vehicle was detained on the ground that the driver was in possession of an e-way bill without any corresponding movement of goods. A penalty was levied for two reasons:

1. Undervaluation of goods (which was subsequently paid, and goods were released).
2. Possession of an e-way bill raised without any corresponding movement of goods.

The penalty for the second ground (e-way bill without movement) was not paid, and consequently, the vehicle remained under detention.

Decision:

The court ruled in favor of the assessee. It held that Section 129 is a penal provision that will kick in only when there is transportation of goods in contravention of statutory provisions. In the instant case, the vehicle was detained only for the reason that the driver was in possession of an e-way bill without any corresponding movement of goods. When there was no movement of goods, Section 129 could not be invoked for detaining the vehicle. The court emphasized that the primary ingredient necessary to attract Section 129 was absent. It further noted that only the e-way bill was seized, not the goods themselves. Thus, on the strength of the mere recovery of an e-way bill, which appeared to have been raised without any movement of goods, the vehicle could not have been impounded. The detention of the vehicle was declared without jurisdiction, and it was ordered to be released forthwith.

Key Takeaways:

• Essential Condition for Section 129: The very essence of Section 129 of the CGST Act is the “movement of goods” in contravention of the Act’s provisions. It is specifically designed to deal with situations where goods are being transported without proper documentation, or with discrepancies.
• No Movement, No Contravention Under Section 129: If there is no actual physical movement of goods, the condition precedent for invoking Section 129 (which talks about goods in transit being liable to detention/seizure) is not met.
• E-way Bill is for Movement: An e-way bill is generated specifically for the movement of goods. Its mere existence or discovery without actual accompanying goods does not, by itself, constitute a contravention of Section 129 which is aimed at regulating physical transportation.
• Jurisdictional Error: Detaining a vehicle under Section 129 when the primary ingredient of “movement of goods” is absent is a jurisdictional error. Such a detention is invalid.
• Release of Vehicle: The court ordered the immediate release of the vehicle, providing direct relief to the assessee.
• Distinct Offenses: While issuing an e-way bill without corresponding goods movement might indicate other offenses (e.g., related to fraudulent ITC or non-existent supplies), these would need to be investigated and addressed under different sections of the GST Act (e.g., Sections 73, 74, 122), not through detention and confiscation under Section 129.