T Stanes and Company Limited Vs Sulakshana S N (GSTAT Bengaluru)
Summary: The GST Appellate Tribunal, Bengaluru, in T Stanes and Company Limited Vs Sulakshana S N, JCCT (Appeals) Mangaluru & Ors., set aside a penalty of ₹9,40,880 imposed under Section 129 of the Central Goods and Services Tax Act, 2017, holding that a procedural error resulting in the expiry of an e-way bill did not justify penal action in the absence of any intention to evade tax. The appellant had dispatched insecticides to Cheminova India Limited, Ballari, as a purchase return, accompanied by a delivery challan and e-way bill. The vehicle was intercepted on 18 March 2024, after the e-way bill had expired on 17 March 2024. The appellant explained that the consignor’s PIN code had inadvertently been entered as 583102 instead of 580025, resulting in the system calculating a distance of 100 km instead of the actual 215 km between Hubli and Ballari.
This reduced the validity period of the e-way bill. The proper officer nevertheless treated the consignment as being transported without an e-way bill and imposed a penalty of ₹9,40,880, which was subsequently confirmed by the First Appellate Authority. Before the Tribunal, the appellant submitted that the discrepancy was purely clerical, that physical verification revealed no mismatch in the quantity or description of goods, and that the transaction did not involve any intention to evade tax. Reliance was placed on Circular No. 41/15/2018-GST and judicial decisions distinguishing minor procedural lapses from substantive violations. The Tribunal examined CBIC Circular No. 64/38/2018-GST dated 14 September 2018, which recognises that Section 129 proceedings need not be initiated for specified minor errors, including certain PIN code mistakes that do not increase the validity period of an e-way bill.
It held that although Section 129 does not expressly prescribe mens rea, its object is to prevent tax evasion and the requirement of intention to evade tax must be read into the provision. The Tribunal also considered decisions of the Gujarat, Allahabad, Kerala, Calcutta, Madras, Karnataka and Madhya Pradesh High Courts. It observed that the documents accompanying the consignment were otherwise in order, the physical verification did not reveal discrepancies, and the Appellate Authority had not alleged any intention to evade tax. Accordingly, the Tribunal held that invocation of Section 129 was neither valid nor justified in the circumstances, set aside the appellate order dated 21 May 2025 confirming the penalty and allowed the appeal.
Cases Discussed
- BVM Trans Solutions Private Limited Vs Commercial Tax Officer (Karnataka High Court) – (2025) 37 Centax 391. Relied upon for the proposition that non-filling of Part B of an e-way bill does not justify invoking Section 129 in the absence of an intention to evade tax. The Tribunal observed that the Karnataka High Court had not subscribed to the contrary view expressed in Gati Kinetsu Express Private Limited.
- Creamline Dairy Products Limited Vs State Tax Officer (Madras High Court) – 2025 (1) TMI 837. Relied upon by the appellant as supporting the principle that procedural irregularities without an intention to evade tax do not warrant invoking Section 129.
- M/s Auto Industries Vs State of Uttar Pradesh (Allahabad High Court) – 2025 (6) TMI 254. Relied upon by the appellant. The Court held that non-filling of Part B of the e-way bill was a mistake and did not warrant invoking Section 129.
- Excellent Poly Con Pvt. Ltd. Vs State Tax Officer, Bureau of Investigation, Kharagpur and Others (Calcutta High Court) – 2024 (12) TMI 210. Relied upon for the principle that Section 129 penalty cannot be imposed for procedural violations without an intention to evade tax.
- M/s T.P. Metals and Roofings Vs Assistant Tax Officer (Int), Mallapuram (Kerala High Court) – 2024 (10) TMI 1239. Relied upon for the proposition that penalty under Section 129 can be imposed only where the violation occurred with the intention to evade payment of taxes.
- Rimjhim Ispat Limited Vs State of Uttar Pradesh (Allahabad High Court) – 2024 (9) TMI 1013. Relied upon by the appellant. An incorrect value recorded in the e-way bill was treated as a typographical error without any intention to evade payment of taxes.
- Landmark Cars Pvt. Ltd. Vs Union of India (Gujarat High Court) – 2024 (7) TMI 370. Relied upon by the appellant. An incorrect vehicle number entered in Part B of the e-way bill was considered a minor error where there was no intention to evade tax.
- Podaran Foods India Limited Vs State of Kerala (Kerala High Court) – 2021 (50) GSTL 412. Relied upon by the respondent and considered by the Tribunal as supporting the appellant. The Tribunal referred to the principle that Section 129 is a machinery provision intended to check tax evasion and must be considered alongside the substantive provisions governing levy and collection of tax.
- Caterpillar India (Madras) Vs State Tax Officer, Chennai (Madras High Court) – 2019 (27) GSTL 4. Relied upon by the respondent but held by the Tribunal to support the appellant. The Court distinguished serious and substantive statutory violations from minor or procedural lapses and directed consideration of the Board’s instructions.
- Gati Kinetsu Express Private Limited Vs Commissioner of Commercial Taxes (Madhya Pradesh High Court) – 2018 (15) GSTL 310. Relied upon by the Appellate Authority and respondent for sustaining penalty where Part B of the e-way bill was not updated. Distinguished by the Tribunal in view of the Karnataka High Court decision in BVM Trans Solutions Private Limited.
FULL TEXT OF THE ORIGINAL ORDER OF GST APPELLATE TRIBUNAL
(1) The appellant, M/s T. Stanes and Company Limited, has filed this appeal against the order of the Joint Commissioner of Commercial Taxes (Appeals), Mangaluru (“the Appellate Authority”), passed in order-in-appeal No. GST/AP/116/2024-25 dated 21.05.2025. The Appellate Authority had confirmed the penalty imposed under Section 129 of the Central Goods and Services Tax Act, 2017 (‘the Act’)
(2) The facts are that a goods conveyance bearing Number KA35C3989 was intercepted by the Commercial Tax Officer on (Enforcement) – 2, Ballari (“the proper officer”) on 18.03.2024 at 08:35 AM. The consignment was accompanied by a delivery challan dated 16.03.2024 and an e-way bill, carrying insecticides from the appellant to M/s Cheminova India Limited, Bellari- 583102, for the purpose of purchase return. The e-way bill’s validity expired on 17.03.2024 at 11:59 AM. The proper officer treated the movement of goods with an expired e-way bill as movement of goods without an e-way bill. A notice dated 25.03.2024 in Form GST MOV-07 was issued proposing to impose a penalty under Section 129 of the Act. The appellant came forward to pay the penalty of Rs. 9,40,880/- to obtain release of the consignment. The proper officer passed an order dated 30.03.2024, in Form GST MOV-09, imposing a penalty of Rs. 9,40,880/- under Section 129 of the Act.
(3) The Appellate Authority dismissed the appeal by order dated 21.05.2025. The Appellant had contended that due to a typographical error, the pin code of the consignor and the consignee was entered as 583102. This clerical error reduced the distance of travelling from Hubli to Ballari from 215 Kms to 100 kms in the E-way bill. The consignment was accompanied by an E-way bill and delivery challan, and there was also no intention to evade the payment of taxes due to the Government. The supply was a non-taxable supply, and hence there was no tax due to the Government. The Appellate Authority held that non-compliance of the legal requirement of the law renders the goods and conveyance liable for detention as stipulated in the law. It was clearly established that the goods were transported in clear violation of the provisions of the Act and the rules. The Appellate Authority had relied on the decision of the Madhya Pradesh High Court in the case of Gati Kinetsu Express Private Limited Vs. Commercial Tax Department [2018 (15) GSTL 310] and of the Kerala High Court in the case of Podaran Foods India limited Vs. The State of Kerala [2021 (50) GSTL 412]
(4) The learned counsel for the Appellant, Mr S.S. Gowrishankar, made the following submissions;
i. It was submitted that the pincode of the consignor and the consignee was inadvertently mentioned as 583102, whereas the pincode of the consignor was 580025, resulting in the auto-population of the distance as 100 km instead of the actual distance of 215 kms, thereby resulting in the expiry of the E-way bill before delivery of the consignment;
ii. It was submitted that the error was a clerical mistake only and that there was no intention to commit any wrong. The proper officer did not find any other mistake on the physical verification of the goods with other documents accompanying the consignment;
iii. The circular of the board in circular No. 41/15/2018-GST dated 13.04.2018 was relied on to contend that Section 129 cannot be invoked for clerical mistake. The error in the pin code had not resulted in increasing the validity period of the e-way bill, but on the contrary, there was a decrease in the validity period of the E-way bill.
iv. Reliance was placed on the following decisions, namely, (I) 2024(7) TMI 370 (The landmark cars Pvt, ltd. Vs. Union of India), (II) 2024(9) TMI 1013 (Rimjhim Ispat Ltd. Vs. State of Uttar Pradesh), (III) 2025(6) TMI 254 (M/s Auto Industries Vs. State of Uttar Pradesh), (IV) 2024(10) TMI 1239 (M/s T.P. Metals and Roofings Vs. Assistant Tax officer (Int), Mallapuram), (V) 2024(12) TMI 210 (Excellent poly con Pvt. Ltd. Vs the State Tax officer, Bureau of Investigation Kharagpur and others), (VI) 2025(1) TMI 837 (M/s Creamline Dairy products Ltd. V/s the state Tax officer, Adjn, Intelligence-1, Chennai).
(5) The learned Authorised Representative for the respondent, Ms. Rukmini, Assistant Commissioner, would rely on the reasoning of the Appellate Authority. The learned authorised representative would submit that there was a clear violation of the Act and rules and hence Section 129 was properly invoked. Reliance was placed on the decision of the Madras High Court in the case of Caterpillar India (Madras) Vs. State Tax Officer, Chennai [2019 (27) GSTL 4] and of the Kerala High Court in the case of Podaran Foods India limited Vs. The State of Kerala [2021 (50) GSTL 412] and prayed for the dismissal of the appeal.
(6) The decisions relied upon by the appellant are as under:
(a) the Gujarat High Court in the decision reported in 2024(7) TMI 370 (The Landmark Cars Pvt, ltd. Vs. Union of India) had held that a mistake occurring in entering the correct vehicle number in Part B of the e-way bill was a minor error only as intention to evade payment of taxes was absent;
(b) the Allahabad High Court in the decision reported in 2024(9) TMI 1013 (Rimjhim Ispat Ltd. Vs. State of Uttar Pradesh) had held that the value of the goods entered as Rs. 2,70,00,000/- in the e-way bill instead of Rs. 27,00,000/- in the invoices was only a typographical error, without any intention to evade payment of taxes;
(c) the Allahabad High Court in the decision reported in 2025(6) TMI 254 (M/s Auto Industries Vs. State of Uttar Pradesh) had held that non-filling up Part B of the e-way bill was a mistake and did not warrant invoking Section 129 of the Act;
(d) the Kerala High Court in the decision reported in 2024(10) TMI 1239 (M/s T.P. Metals and Roofings Vs. Assistant Tax Officer (Int), Mallapuram), had held that penalty under Section 129 can be imposed only if the violation had happened with the intention to evade payment of taxes. Identical principles were laid down by the Calcutta High Court in the decision reported in 2024(12) TMI 210 (Excellent poly con Pvt. Ltd. Vs the State Tax Officer, Bureau of Investigation Kharagpur and others) and by the Madras high Court in the decision reported in 2025(1) TMI 837 (M/s Creamline Dairy Products Ltd. Vs. the State Tax Officer, Adjn, Intelligence-1, Chennai).
(7) The decisions relied upon by the respondent are as under:
(a) The Madhya Pradesh High Court in the case of Gati Kinetsu Express Private Limited vs. Commissioner of Commercial Taxes [2018 (15) GSTL 310] had held that penalty under Section 129 was justified as Part B of the e-way bill, furnishing all the details including the vehicle number, was not updated before the goods were loaded in the vehicle.
(b) The Madras High Court, in the case of Caterpillar India (Madras) Vs. State Tax Officer, Chennai [2019 (27) GSTL 4], had held that it was the assessing officer/State Tax Officer who was the competent person for the determination of penalty.
(c) The Kerala High Court in the case of Podaran Foods India limited Vs. The State of Kerala [2021 (50) GSTL 412] had held that the detaining authority did not have the discretion to release the consignment on terms that are less than what was specified in Section 129(1) of the Act.
(8) Heard the rival submissions and perused the connected records. The following issue arises for our consideration –
“Whether the imposition of penalty under Section 129 of the Central Goods and Services Tax Act is justified, for the reason of non-validation/extension of the period of the e-way bill as per Rule 138 of the Central Goods and Services Tax Rules”.
(9) It is an undisputed fact that when the vehicle was intercepted on 18.03.2024 at 8.35 AM, it was accompanied by an e-way bill and a delivery challan. The e-way bill had expired on 17.03.2024 at 11.59 AM, and hence the movement of goods was treated as movement of goods without an e-way bill. A physical verification of the goods was done on 25.03.2024, and the quantity and description of goods were found to be in order with the document tendered during the time of inspection. The reason offered was that the pin code of the consignor and the consignee was entered as 583102, thus reducing the distance of travelling from Hubli to Ballari from 215 Kms to 100 kms in the E-way bill.
(10) Section 129 of the Act empowered the proper officer to demand a penalty equal to 200% of the tax payable on the goods, in case of violation of the provisions of the Act or the rules, during transport of the goods. Though the Section does not specifically provide for the application of mens rea, still the object of enacting such a Section in a taxing enactment is only for the purpose of preventing evasion of tax and mens rea should be read into Section 129. The Central Board of Indirect Taxes and Customs (‘the Board’) had issued instructions vide circular no. 64/38/2018-GST dated 14.09.2018 giving instances of cases where Section 129 need not be invoked. This circular is binding on the authorities like the proper officer by virtue of Section 168 of the Act.
(11) The decisions cited by the respondent do not support the case of the respondent for the following reasons;
(a) The decision of the Madhya Pradesh High Court in the case of Gati Kinetsu Express private limited Vs. Commissioner of Commercial Taxes [2018 (15) GSTL 310] cannot be applied for two reasons. Firstly, the view expressed by the Madhya Pradesh High Court was not subscribed by the Karnataka High Court in the case of BVM Trans Solutions private limited Vs. Commercial Tax Officer [(2025) 37 Centax 391], as could be seen from para 12 of the report. Secondly, the view of the Karnataka High Court was that non-filling up of Part B of the e-way bill does not warrant invoking Section 129 of the Act in the absence of any intention to evade payment of taxes.
(b) The decision of the Madras High Court in the case of Caterpillar India (Madras) Vs. State Tax Officer, Chennai [2019 (27) GSTL 4] supports the case of the appellant. The High Court, after referring to the circular of the Board, held that a holistic reading of the statutory provisions and the Circular noted above indicates to me that the Department does not paint all violations/transgressions with the same brush and makes a distinction between serious and substantive violations and those that are minor/procedural in nature . The officers were directed to pass fresh orders keeping in mind the instructions of the board and the explanations offered by the petitioners.
(c) The decision of the Kerala High Court in the case of Podaran Foods India Limited Vs. The state of Kerala [2021 (50) GSTL 412] supports the case of the appellant. The Court held that Section 129 was merely a machinery provision that is intended to check evasion of tax and which must be read along with the substantive provisions of the statute that provide for the levy and collection of tax. The Court further held that it has to be borne in mind that Section 129 forms part of the machinery provisions under the Act to check evasion of tax and a detention can be justified only if there is a contravention of the provisions of the Act in relation to transportation of goods or their storage while in transit.
(12) The decisions relied on by the appellant apply to the issue under dispute. The Courts have repeatedly held that procedural lapses or mistakes cannot be a ground for invoking Section 129 of the Act in the absence of any intention on the part of the taxpayer to evade payment of taxes. The reasonableness of the explanation offered by a taxpayer is a relevant factor to be kept in mind before invoking Section 129. The appellate authority has not alleged the existence of mens rea on the part of the appellants to evade payment of taxes. We hold that the invoking Section 129 of the Act was not valid and justified, in the facts and circumstances of the case.
Conclusion
(i) The order of the Joint Commissioner of Commercial Taxes (Appeals), Mangaluru, passed in order-in-appeal no. GST/AP/116/2024-25 dated 21.05.2025 confirming the levy of penalty of Rs. 9,40,880/- under Section 129 of the Central Goods and Services Tax Act, is set-aside.
(ii) The appeal is allowed.
