The Goods and Services Tax Appellate Tribunal (GSTAT), Raipur, has allowed assessee’s appeal against a ₹6.41 lakh detention penalty, holding that the allegation that the actual supplier had not generated the invoice and e-way bill was unsustainable in a duly documented bill-to/ship-to transaction.
The Bench of Pradeep Kumar Vyas (Judicial Member) and Chandra Bhushan Singh (Technical Member) found that the invoice chain, e-way bills, commercial correspondence and factory-gate records established compliance with the requirements governing movement of goods.
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The State tax department intercepted the vehicle on November 10, 2024, at approximately 2:58 pm near Village Urdana. The driver produced invoices and e-way bills relating to the consignment.
However, the inspecting officer objected to the invoicing and e-way bill arrangement, alleging that the actual seller had neither issued the relevant invoice nor generated the e-way bill. The authorities consequently imposed a penalty totalling ₹6,41,540, comprising CGST and SGST penalties of ₹3,20,770 each, under Section 129 of the GST legislation.
The company paid the penalty to secure release of the vehicle. Its first appeal was dismissed by the Appellate Authority and Joint Commissioner (Appeal), State Tax, Raipur, on April 17, 2025, prompting the appeal before GSTAT.
The Tribunal examined Section 10(1)(b) of the Integrated Goods and Services Tax Act, 2017, which addresses delivery of goods to a recipient or another person on the direction of a third person.
It explained that a bill-to/ship-to transaction involves an original supplier, an intermediary purchaser and an ultimate recipient. The supplier bills the intermediary but delivers the goods directly to the ultimate recipient on the intermediary’s instructions. The intermediary separately invoices the ultimate recipient for the onward supply.
For place-of-supply purposes, the intermediary is deemed to have received the goods even though it does not physically take delivery.
The Bench observed that this is a recognised commercial practice. Such an arrangement does not itself violate GST law where the transactions are genuine, properly documented and accounted for, and the applicable tax liability is discharged.
On examining the documents, the Tribunal found that Nalwa’s invoices identified Jindal Steel and Power Limited as the “bill-to” purchaser and Gupta and Sons as the “ship-to” consignee.
The onward invoices identified Gupta and Sons as both the purchaser and the recipient. The invoices also recorded transporter particulars and the registration number of the intercepted vehicle.
The Bench found that this documentary chain was consistent with the claimed bill-to/ship-to arrangement. It also noted that all four invoices were electronically generated and their particulars were capable of verification from departmental records.
The Tribunal rejected the allegation concerning non-generation of invoices by the actual supplier in light of this evidence.
A central issue was whether the e-way bills were invalid because Gupta and Sons, rather than the original supplier, had generated them.
Referring to Rule 138(2) of the CGST Rules, 2017, the Tribunal explained that the consignor or consignee causing the movement of goods may generate the e-way bill, depending on the circumstances.
The invoices described the transport arrangement as “Party Transporter”, and the evidence established that Gupta and Sons had arranged transportation. The Tribunal therefore held that Gupta and Sons was entitled to generate the requisite e-way bills.
Consequently, the original seller’s failure to generate the e-way bills could not, by itself, justify detention when the person responsible for arranging movement had validly generated them.
The department also alleged that transportation had commenced before the e-way bills were generated.
The Tribunal examined factory-gate records showing that the vehicle departed Nalwa’s premises at 2:20 pm on November 10, 2024. The two e-way bills had been generated earlier that morning, at 9:57 am and 10:00 am.
The vehicle was intercepted at 2:58 pm on the same day. These records supported the company’s explanation that the e-way bills existed before dispatch.
Email correspondence between Jindal Steel and Power Limited and Gupta and Sons further corroborated the purchase arrangement.
The Tribunal also addressed the commercial reasons for an intermediary issuing its own invoice to the ultimate purchaser.
It observed that an intermediary may wish to preserve its customer relationship by retaining the original supplier’s invoice and issuing a separate invoice for the onward supply. This could prevent the customer from directly approaching the original supplier for future purchases.
The Bench held that this practice does not itself establish illegality, provided the underlying transactions are genuine, duly documented and appropriately taxed.
Considering the documents together, GSTAT concluded that the transaction fell within the bill-to/ship-to framework and that the alleged failure of the actual supplier to generate the requisite invoice and e-way bill could not be sustained on the facts.
The Tribunal held that the Section 129 penalty could not survive in these circumstances and allowed the appeal with consequential relief in accordance with law.
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