The Goods and Services Tax Appellate Tribunal (GSTAT), Bengaluru, has set aside a penalty of ₹9,40,880 imposed after a wrong PIN code shortened the validity of an e-way bill.
The bench of Srikanth Venkatraman (Judicial Member) and Sudha Koka (Technical Member) has observed that, in the circumstances of the case, the procedural error did not justify action under Section 129 of the Central Goods and Services Tax Act when no intention to evade tax was alleged.
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A vehicle carrying insecticides from the company to Cheminova India Limited, Ballari, for a purchase return was intercepted on March 18, 2024, at 8:35 am. The consignment had a delivery challan and an e-way bill, but the bill’s validity had expired at 11:59 am on the previous day.
According to the company, the consignor’s PIN code was mistakenly entered as 583102, the same as the consignee’s, instead of 580025. As a result, the e-way bill showed the journey from Hubli to Ballari as 100 km rather than the actual 215 km, shortening its validity.
The tax officer treated the movement as one without a valid e-way bill. Following a notice, the officer imposed a penalty of ₹9,40,880 under Section 129. The company paid the amount to secure the consignment’s release, then challenged the penalty.
The company argued that the PIN code entry was a clerical mistake. It said the consignment carried the required documents, the error reduced rather than extended the e-way bill’s validity, and there was no intention to evade tax. It also pointed out that the officer found no discrepancy in the goods during physical verification.
The department maintained that the expired e-way bill was a clear violation of the GST rules and that detention and penalty were justified. The first appellate authority had accepted that view.
The Tribunal noted that the vehicle was accompanied by both an e-way bill and a delivery challan when intercepted. Physical verification later confirmed that the quantity and description of the goods matched the documents. The explanation for the shorter validity period was the incorrect PIN code and the resulting 100 km distance shown in the bill.
The Bench said Section 129 serves the purpose of preventing tax evasion. Although the provision does not expressly mention mens rea, or intent, the Tribunal held that intent to evade tax must be considered when applying it. It also referred to CBIC Circular No. 64/38/2018-GST, which identifies situations in which Section 129 need not be invoked for certain errors.
Reviewing the judgments cited by both sides, the Tribunal distinguished substantive transport violations from procedural mistakes. It said the reasonableness of a taxpayer’s explanation matters and noted that the appellate authority had not alleged any intention by the company to evade tax.
“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 Tribunal held.
It therefore set aside the appellate order confirming the ₹9,40,880 penalty and allowed the appeal. The ruling addresses the penalty on the specific facts before the Bench: the goods and documents matched, and the expired bill was traced to an incorrect PIN code that shortened its validity.
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