Introduction

• The petitioner was transporting goods accompanied by a valid tax invoice and e-way bill.
• During transit, the goods were intercepted by the GST authorities.
• The only discrepancy noticed was that the petitioner had not generated the mandatory e-invoice, though generation of an e-invoice was required under the applicable notifications.
• There was no allegation that the goods were unaccounted, nor was there any allegation of tax evasion or intention to evade tax.
• Despite the absence of any allegation regarding evasion of tax, the proper officer passed an order under Section 129(3) imposing a penalty of ₹12,12,120.
• Aggrieved by the imposition of penalty under Section 129, the petitioner approached the High Court.

Issue

Whether penalty under Section 129 of the CGST Act can be imposed merely because the goods were transported without an e-invoice, despite being accompanied by a valid invoice and e-way bill and there being no allegation or evidence of tax evasion?

Petitioner’s Contentions

• The petitioner contended that the only defect was the non-generation of the e-invoice.
• The goods were accompanied by a valid tax invoice and e-way bill, and therefore the transaction was fully accounted for.
• The department had not alleged any suppression of turnover, non-payment of tax, or intent to evade tax.
• In such circumstances, the provisions of Section 129 relating to detention and penalty were not attracted.
• At the most, penalty could be imposed under Section 122, subject to the safeguards contained in Section 126, dealing with penalties for minor breaches.
• The issue was squarely covered by the judgment of the Kerala High Court in T.P. Metal Roofings v. Assistant Tax Officer & Others (2024 SCC OnLine Ker 4951).

Department’s Contentions

• The State raised a preliminary objection regarding the maintainability of the writ petition on the ground that the petitioner had an effective statutory remedy of appeal under Section 107.
• It was submitted that the petitioner admittedly failed to generate an e-invoice, which was mandatory under the CGST Rules and the relevant notifications.
• The plea that the e-invoice could not be generated due to a technical glitch was stated to be an afterthought.
• Since the petitioner was legally required to generate the e-invoice before commencement of movement of goods, the proceedings under Section 129 were justified.

High Court’s Findings

The High Court observed that: