2026-VIL-193-GSTAT-PYG
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SGST Tribunal

GST - Penalty under Section 129(3) for transport of goods without e-way bill, Requirement of intent to evade tax - Appellant was transporting motorcycles accompanied by a valid e-invoice carrying the invoice reference number, QR code and the engine and chassis number of each unit, but no e-way bill was produced - First Appellate Authority upheld the demand holding that Section 129 creates strict liability irrespective of intent - Whether penalty can be sustained for the sole omission of an e-way bill where the transaction is accompanied by a genuine e-invoice and there is no evidence of tax evasion - HELD - The question is to be answered by reference to the statute as it stood on the date of interception. Before its amendment with effect from 01.01.2022, Section 129(6) provided that where tax and penalty were not paid, further proceedings shall be initiated in accordance with Section 130, which confines confiscation and penalty to goods dealt with intent to evade payment of tax. Section 129 as it then stood was therefore the first step of a process leading into a section built around intent - The Allahabad High Court, interpreting the same unamended provision, has consistently held that intent to evade tax is a necessary condition. The decision of the Supreme Court applied to a differently worded sales tax statute with no such link and involved a deliberate scheme, and is distinguishable - The motorcycles were uniquely identifiable by engine and chassis numbers, their sale required registration with the transport authorities – Further, the e-invoice matched the returns, tax had already been paid at the time of purchase, physical verification found no mismatch. There is nothing on record suggesting concealment of the goods, their value or destination, while the explanation for the lapse was specific and verifiable - The First Appellate Authority erred in relying on the later amended version of Section 129, which treats the provision as one of strict liability and did not apply to the transaction - Intent to evade tax was a necessary condition for imposing penalty under Section 129 for the transaction, and the penalty for the sole omission of the e-way bill cannot be sustained and set aside – The appeal is allowed - Passing of the penalty order within a short time of the show cause notice and demand of tax a second time on the same consignment - Violation of Section 75(4) and principles of natural justice - Show cause notice and detention order were served on the Appellant, who deposited the demanded amount under protest, and the final order under Section 129(3) was passed within less than an hour of the notice - Whether passing the penalty order within such a short time after the show cause notice is a fatal defect - HELD - Though Section 129(3) as it then stood did not prescribe any time limit, the word "shall" in Section 75(4) makes it mandatory to grant an opportunity of hearing where an adverse decision is contemplated. Effectively no time was afforded to respond to the notice, and it was neither physically nor legally possible for the adjudicating authority to have applied its mind to the explanation of the Appellant or the traceability of the motorcycles within that time. The failure to provide a reasonable opportunity of hearing is a fatal defect, and the haste renders the order a jurisdictional nullity - Demanding tax a second time under Section 129(1)(a) on the same consignment, when the tax had been discharged through returns, amounts in substance to double taxation, and levy of an additional penalty is contrary to the statutory scheme - The orders of the FAA and the Adjudicating Authority are set aside and the appeal is allowed.
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