Release of Detained Goods Ordered Upon Compliance with Section 129(1)(a) Despite E-way Bill Absence.

Release of Detained Goods Ordered Upon Compliance with Section 129(1)(a) Despite E-way Bill Absence.

Issue:

Whether goods detained in transit solely for the absence of an e-way bill, while accompanied by a tax invoice and with both seller and purchaser registered, should be released, and whether the matter warrants further consideration regarding the substantial penalty imposed.

Facts:

• Goods in transit were intercepted and detained because no e-way bill was presented at the time of detention.
• The registration of the petitioner-seller was subsequently suspended and then restored.
• A show cause notice was issued, followed by a penalty order under Section 129(1)(b) of the CGST Act for Rs. 94,50,000 for the release of goods.
• The petitioner’s appeal against the penalty order was dismissed.
• The petitioner-seller contended that at the time of the seizure order, both the purchaser and seller were duly registered, and the goods were accompanied by a tax invoice; only the e-way bill could not be produced.

Decision:

The court deemed that the matter required consideration and ordered it to be listed for further proceedings. In the interim, the goods in question were to be released, provided the petitioner-seller complied with the provisions of Section 129(1)(a) of the CGST Act. (The case was partly against the revenue and remanded for further listing/consideration).

Key Takeaways:

• The absence of an e-way bill, while a contravention under GST law, may not automatically justify a disproportionately high penalty or outright confiscation, especially if other valid documents like a tax invoice are present and the parties are registered.
• Courts are inclined to ensure that the release of goods, even if initially detained for non-compliance, is facilitated if the statutory conditions for release (e.g., payment of tax and penalty under Section 129(1)(a) where the owner comes forward) are met.
• The distinction between Section 129(1)(a) (owner comes forward to pay penalty equal to 200% of tax, or 2% of value for exempted goods) and Section 129(1)(b) (owner does not come forward to pay penalty equal to 50% of value or 200% of tax, whichever is higher) is crucial for the quantum of penalty. The court’s directive to comply with Section 129(1)(a) suggests a willingness to allow release on a potentially lower penalty if the owner acknowledges ownership and pays the specified amount.
• The case indicates that the matter requires a full hearing to determine the appropriateness of the penalty, considering the circumstances and the nature of the violation.