The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench at Ghaziabad, has held that leaving vehicle details unfilled in Part B of an e-way bill cannot attract a penalty when the movement falls within the statutory exception for transporting goods from the consignor’s premises to the transporter’s premises within 50 kilometres in the same State for further transportation.
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The bench of Dr. Sanjay Kumar Chandhariyavi (Judicial Member) and Sungita Sharma (Technical Member) cancelled a penalty of ₹32,380 imposed under Section 129 of the GST law and emphasised that the general requirement to furnish vehicle details must be read together with the exceptions expressly provided in the Rules. An omission permitted by those Rules cannot itself constitute a contravention warranting detention-related penalties.
The company, which manufactures and supplies adhesives, wood finishes, thinners, fertilisers and other products, dispatched goods from its Dadri depot in Uttar Pradesh on May 21, 2024. The dispatch involved four tax invoices with a combined value of ₹5,67,560.
The dispute concerned two invoices for ₹51,336 and ₹54,903 relating to supplies intended for a buyer in Saharanpur.
According to the company, the goods were being carried in vehicle number UP14NT-4793 through Parnami Logistics from the Dadri depot to the transporter’s premises at Rajkamal Warehouse, Ghaziabad. The distance for this initial journey was less than 30 kilometres.
The consignments were to be consolidated at the transporter’s premises before onward dispatch to Saharanpur. A transport receipt dated May 21, 2024 accompanied the goods.
The vehicle was intercepted near Sirsa Cut, Greater Noida, at 7:40 a.m. on May 22, 2024. The Tribunal recorded that the quantity, description and value of the goods matched the accompanying invoices, e-invoices and transport documents.
However, the authorities objected to the absence of the vehicle number in Part B of the two relevant electronic documents.
Following a show cause notice issued on May 22, 2024, the adjudicating authority imposed a penalty of ₹32,380 through an order dated May 27, 2024. The amount comprised CGST and SGST penalties of ₹16,190 each.
The first appellate authority upheld the penalty on December 12, 2024, reasoning that an e-way bill without Part B was invalid for the movement of goods.
Before the Tribunal, the company relied principally on the third proviso to Rule 138(3). It submitted that the intercepted movement was the initial journey from its depot to the transporter’s local premises, within the same State and within the prescribed 50-kilometre limit.
The Department maintained that Part B was mandatory and that goods could not move under an incomplete e-way bill.
The Tribunal explained that the third proviso to Rule 138(3) permits conveyance details to remain unfilled where goods are transported up to 50 kilometres within the same State or Union territory from the consignor’s place of business to the transporter’s place of business for further transportation.
It clarified that this provision does not exempt every journey shorter than 50 kilometres. The taxpayer claiming the exception must establish the originating premises, the transporter’s receiving premises, the purpose of further transportation, the distance and movement within the same State.
The applicable requirements concerning consignment information and accompanying invoices also continue to operate.
The bench further noted that Explanation 2 to Rule 138(3), while prescribing the general requirement of Part B for valid road movement, expressly preserves the relevant exceptions. The Department’s position that every road movement without Part B was invalid therefore overlooked the statutory framework.
An important aspect of the ruling concerned the distinction between the immediate transport leg and the ultimate destination of the goods.
The Tribunal held that the buyer’s address at Saharanpur did not, by itself, establish that the intercepted vehicle had begun the onward journey to that destination.
For applying the third proviso to Rule 138(3), the relevant distance was the initial movement from the consignor’s depot to the transporter’s premises. The total distance to the final buyer could not replace that distance.
On the recorded facts, the Dadri depot and the transporter’s Ghaziabad warehouse were both in Uttar Pradesh, the journey was less than 30 kilometres, and its purpose was consolidation before further transportation. The Tribunal found no contrary factual finding disproving that account.
It consequently held that the movement fell within the statutory exception.
The bench distinguished this initial-stage exception from the proviso to Rule 138(5), which concerns specified final-stage movement from the transporter’s premises to the consignee’s premises.
The Tribunal held that Section 129 applies when goods are transported or stored in transit in contravention of the Act or Rules. Establishing such a contravention is therefore essential before the statutory penalty can arise.
Although Section 129(1)(a) prescribes a penalty equal to 200% of the tax payable on taxable goods where the owner comes forward, the Tribunal explained that the penalty rate becomes relevant only after an actual breach is established.
Here, the sole substantive allegation was the absence of vehicle details in Part B during a journey for which the Rules expressly permitted that omission.
The first appellate authority had applied the general requirement without considering its exception. Once the exception applied, the alleged defect ceased to constitute a breach, leaving the penalty without a legal basis.
The Tribunal confined its finding to the eligible initial journey. Any subsequent movement remained subject to the requirements applicable to that stage of transportation.
The order also examined the role of mens rea, or the mental element, in civil fiscal penalties.
Discussing Supreme Court decisions including Nathulal, Hindustan Steel, Shriram Mutual Fund and Guljag Industries, the Tribunal distinguished the question of whether a legal obligation had been breached from the separate question of whether the relevant penalty provision required guilty intention.
It expressly declined to hold that every penalty under Section 129 must fail whenever fraudulent intention is not separately proved.
Instead, the appeal succeeded because no statutory breach had occurred. Even a strict civil penalty could not be imposed for conduct expressly permitted by the governing Rule.
The Tribunal also referred to Satyam Shivam Papers and the Allahabad High Court decisions in Roli Enterprises and RS Industrial Solutions. It treated those rulings as supporting the need to examine the documents, explanations and actual circumstances before inferring tax evasion.
However, its principal finding rested on the express initial-journey exception under Rule 138(3).
The Tribunal considered Section 126, which addresses minor breaches, rectifiable documentary mistakes and proportionality in penalties.
It noted that Section 126(6) excludes cases where the penalty is prescribed as a fixed amount or fixed percentage. That limitation was relevant because Section 129(1)(a) prescribes a fixed percentage.
Accordingly, the bench did not invoke Section 126 as a general power to waive or reduce the penalty. It held that liability had never arisen because the Rules permitted the omission alleged in the notice.
The Tribunal also declined to impose a general penalty under Section 125 merely because the appeal against the Section 129 penalty was being allowed.
The company had additionally challenged the proceedings on grounds concerning the Document Identification Number, signatures or electronic authentication, and uploading of summaries under Rule 142.
The Tribunal did not decide those objections because the substantive statutory ground was sufficient to dispose of the appeal.
It observed that the applicability of the cited CBIC DIN directions to State proceedings could not be assumed without examining the relevant State directions. It also noted that an unsigned copy alone did not establish that the original electronic order lacked authentication.
The order therefore made no finding either validating or invalidating the proceedings on those separate procedural grounds.
The Tribunal set aside both the original penalty order and the appellate order.
It directed that any amount paid or recovered towards the ₹32,380 penalty be refunded in accordance with the applicable law. Any appeal pre-deposit becoming refundable as a consequence of the ruling must be returned with interest under Section 115, while interest on other refundable amounts would be governed by the applicable statutory provisions.
Any security or bank guarantee furnished solely for the penalty must also be released.
The jurisdictional proper officer was directed to correct the corresponding demand entries and electronic summaries. The Department’s cross-objection was rejected to the extent that it sought to sustain the penalty on the ground decided by the Tribunal. No costs were awarded.
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