As Rule of E-way bill has been made effective since April 2018 in case of Inter-State movement of goods and States have also made e-way bill mandatory for intra-state movement of goods. Nowadays GST authorities are intercepting vehicles and detaining goods along with vehicle in absence of e-waybill or incomplete e-way bill, i.e. Part-B is not filled. The absence of document/incomplete document may be deliberate or due to mistake or GSTN glitches. After interception, detention/seizure order under section 129(3) is passed, thereafter SCN is issued under section 129(3) and goods are released only on payment of GST and penalty equivalent to GST liability.

Now the question is whether Section 129(3) should be made applicable to all cases where e-way bill is not prepared or incomplete e-way bill is prepared. Whether owner should be held liable for 100% penalty under section 129 for mistake of employee or failure of GST infrastructure.

Relevant provisions in case of inadvertent mistake/technical glitches:

Section 122(1) (xiv), section 126, section 129(3) & section 130 of CGST Act, 2017 needs to be critically analysed to check the legality of 100% penalty against non-compliance of E-way Rules. Section 122(1) (xiv) imposes maximum penalty of Rs. 10,000/- if goods are transported without the cover of documents. Language of section 122(1) (xiv) is reproduced as under:

“(1) Where a taxable person who”


(xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;

he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.”

Section 126 mandates that no penalty shall be levied for minor breaches of tax regulations or procedural requirements. Accordingly, non-mentioning of vehicle no. in part-B of E-way bill should be treated as minor breach specially where goods are carried with proper tax invoice, bilty no. showing vehicle No. and RC of vehicle etc. similarly where website doesn’t allow certain information to be filled in Part-B, absence of information should be treated as minor breach. For example, in case of Delhi based vehicle, e-way bill system does not allow vehicle no. ‘DL1AB123’ and shows error ‘invalid format’ and requires no. to be entered as ‘DL01AB0123’ and in absence of knowledge on the part of employee /assessee /transporter, part- B which GSTN is not allowing, may not be downloaded and goods are transported without downloading Part-B of e-way bill. Language of section 126 is reproduced as under:

Section  126: General  disciplines related to penalty. (1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.

Now comes the part of deliberate evasion of taxes where applies section 129 & 130 of CGST Act, 2017. If we don’t distinguish the deliberate and non-deliberate non-compliance of e-way bill rules, the innocent shall have the same burnt as a willful defaulter which doesn’t and cannot be justified.

Relevant provisions in case of deliberate evasion of taxes

Section 129(1) provides detention or seizure of goods in case of contravention of the provisions of GST Act or the rules made thereunder. Section 129(6) provides that proceedings shall in initiated as per section 130 of CGST Act, 2017 where GST along with penalty is not paid within 7 days of dentention/seizure. The language of which is reproduced as under:

(1) Notwithstanding anything contained in this 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 …………………………

(6) where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130

Reference of section 130 under section 129(6) clarifies the intention of the legislature regarding providing two different provisions under section 122 and section 129. Section 130 (1) provides the conditions in which confiscation of goods or conveyance is allowed. Section 130(1) uses the words ‘with intent to evade payment of tax’, ‘does not account for any goods on which he is liable to pay tax’, ‘supplies any goods liable to tax under this Act without having applied for registration’ which indicates that section 130 allows detention where person has willfully contravened the GST provisions with intent to evade payment of tax. The usage of these words in section 130, reference of which is given in section 129 indicates and clears the intention of the legislature that section 129 applies in cases where willful default and intent to evade payment of taxes is present not when merely mistakes or technical glitches are there. Language of section 130(1) is reproduced as under:

1) Notwithstanding anything contained in this Act, if any person’

(i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(ii) does not account for any goods on which he is liable to pay tax under this Act; or

(iii) supplies any goods liable to tax under this Act without having applied for registration; or

(iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

(v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.”

Kerela High Court has very aptly determined in M/s Indus Towers Limited Versus The Assistant State Tax Officer And State Tax Officer (Intelligence), 2018(01)LCX0010 that the invocation of section 129 can only be done when ingredients of section 130 are present.

A combined reading of Sections 129 and 130, especially the provision contained in sub section (6) of Section 129 indicates that the detention of the goods is contemplated under the statutes only when it is suspected that the goods are liable to confiscation. This aspect is seen clarified by the Central Board of Excise and Customs in the FAQs published by them on 31.3.2017 also. Section 130 dealing with the confiscation of goods indicates beyond doubt that the confiscation of goods is contemplated under the statutes only when a taxable supply is made otherwise than in accordance with the provisions contained in the statutes and the Rules made thereunder with the intent to evade payment of tax. If that be so, mere infraction of the procedural Rules like Rules 55 and 138 of the State GST Rules cannot result in detention of goods, though they may result in imposition of penalty. In other words, detention of goods merely for infraction of the procedural Rules in transactions which do not amount to taxable supply, is without jurisdiction.”

Hence, detention or seizure under section 129(1) and issuance of SCN under section 129(3) in absence of intention to evade payment of tax is illegal and doesn’t justify the intention of legislature to penalize the willful defaulters.

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  1. Rohit lashkari says:

    Goods delivere to buyer and e way bill not generated by us but gstr1 and gstr3b filed timely but after 2 yrs sgst department summons to us under sec 70 and as per sec 138 . So what to do in this matter ?

  2. Anil kumar illendula says:

    whether penalty should be paid by supplier if he raised proper invoice and waybill But because of no entry of big vehicle , transported in small vehicle to the place of big vehicle within 15 kms.

  3. harish m s says:

    hi is it penalty total 10000 for both SGST and CGST or CGST -10000 and SGST=10000 for non generated eway bill please kindly confirm it is with in the city .

  4. Kaidzoher says:

    Sir. We have put a wrong number of vehicle on e way bill the material physical verification shower nil difference bill material tax are all correct name gst number all correct only vehicle number fo not match and we have put a vehicle number 1234 and forgot yo change when we got a vehicle do we have to pay penallty no intention of avoiding tax igst bill properly made

  5. jay patel says:

    my consignment has been detained by the issue made by me that I generated e-way bill and cancelled
    it due to issue with the entered quantity. and the same canceled copy was with the invoice and the consignment has been detained by the sale tax authority and the are giving me the penalty of 100% of tax amount+100% of goods amount is there any solution for that please give the solution as soon as possible please!!!!

  6. Gunaseelan says:

    For a consignment e way bill penalty , the officials mentioned fine as 100% tax+100% penalty (gst value is 54000rs.+54000 rs penalty).
    108000.00/-. Is it possible to reduce 54000rs in,gst payment next month,against same consignment?

  7. Amit Rander says:

    We received material from our supplier where they have mentioned branch address for delivery in invoice but did not correct the automatically fed address in ewaybill when our GSTIN was enterrd(by default which is our head office address) the vehicle was confiscated inside our branch by the CTO and officer demanded to take the vehicle at Sales Tax office. As the vehicle owner was not agreeing upon to move vehicle outside, we agreed upon to pay the penalty So that the vehicle needn’t be moved but the CTO denied release of the vehicle in that case either. All other details are correct and branch (in same state) is registered under GSTIN. Please suggest what shall be done! Thanks.

  8. PRIYANKA says:

    i have generated EWAY BILL 2 month before, our client does not accept the invoice and Ewaybill after 2 month of submission.
    because i had submit eway bill without GST amount by mistake and send the same without knowing the difference of goods value in tax invoice & eway bill. now they are not accepting invoice & eway bill due to mismatched amount. and the client was saying that responsible to bear penalty in future has to be supplier.
    please suggest any help.

  9. Trushar chaudhari says:

    Our office is in Rajasthan. We have procured goods from Mumbai and all taxes is paid. Now in Rajasthan we were dispatching goods from wear house to other place and forgot to make e way bill. Meanwhile vehicle seized in between as vehicle had not e way bill. As goods value was 8 lac sales tax authorities asking penalty of 3 lac. Is penalty is that much or penalty should be 10000.

  10. shobhit aggarwal says:

    If the registered Dealer does not generate E-way bill and the equipment of more than 1Lacs is dispatched safely to the buyer.
    Can the dealer be penalized thereafter ? If not, who will be penalized ?

  11. Chiranjeevi says:

    I was sold goods with tax invoice and the vehicle was dispatched but the e way bill not generated. We noticed it after 1 month and mean time we paid the tax on non generated e way bill sales also. Is there any penalty or any other tax liability?

  12. jayakumar sR says:

    If the proper Officer upon interception of the Goods and the Conveyance(Passenger Bus) of a esteem company group, issues notice for not uploading part B of eway Bill releases the conveyance and detains and initiates proceedings u/s 129(1) & (3) only of the goods and levies penalty … can it be said that the entire proceedings is void ab initio

  13. manish patel says:

    if i have prepared a e way bill with wrong amount by mistake ( instead of 2 qty , i have taken only of one quanity amount is taken. ) .

  14. Satyajit Das says:

    Dear Madam
    One consignment was despatched from my factory on 30.10.18 where Billing address and shipping was different ( but in same state). We have clearly mentioned both the address in Invoice but my staff, by mistake, has not mentioned the ‘ Shipped To’ address in E-waybill. The sales tax officer detained the vehicle and demanded 100% Tax and 100% Penalty.Please advice What should I do?

  15. piyush sanghani says:

    My vehicle was dispatch from the SEZ with payment of duty and GST in advance but the e way bill not generated so can penalty will possible on this cargo??? if yes then how much it is??

  16. SHARAD AGRAWAL says:

    Hello mam
    I have a similar case and I want your advise urgently if I can Contact to you..
    What may be the possibilities while going into appeal and related issues concerned.
    Kindly reply so that I can ask my question.
    It’s very urgent as I have to pay the liability and I am a transporter..

  17. SPR says:

    for an instance i have not generated waybill for a bill value of RS. 1 Lakh… The transportation of goods has taken place and there was no such checking during the transportation.

    In the above case what will be my liabiity..i.e., can the Gst officials penalise me at a later date for not generating waybill for the transaction.

  18. shankar patil says:

    Good Article

    Execution of security takes time during seizure of goods on Road- Eway bill related non compliance , I hv paid IGST mentioning under protest, due to urgency of goods, Any provisions exist for suo moto payment of GST under protest

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September 2021