Facts of the Case

Greenlights Power Solutions, a validly registered GST dealer engaged in electrical contract works, was transporting goods from Ernakulam to a hospital site in Assam after paying the requisite tax. The consignment was intercepted by the State Tax Officer, who detained the goods under Section 129 of the CGST Act, 2017, on noticing that while the goods were transported on 02.03.2021, the tax invoice showed the date as 03.02.2021 — a discrepancy the petitioner attributed to the computer system generating the date in mm-dd-yyyy format instead of the Indian dd-mm-yyyy format. Goods were released on furnishing a bank guarantee, and during pendency of the writ petition, a final order in Form GST MOV-09 under Section 129(3) was passed, imposing tax of Rs.27,540 and an equal penalty. The petitioner amended the writ petition to challenge this final order.

Issues Involved

  1. Whether a mere date-format discrepancy between the invoice and the e-way bill, with all other particulars matching, justifies detention of goods and imposition of tax and penalty under Section 129 of the CGST Act.
  2. Whether the writ petition was maintainable despite the availability of an alternative statutory appellate remedy.
  3. Applicability of CBIC Circular No. 64/38/2018 dated 14.09.2018 to the facts of the case.

Petitioner's Arguments

  • The detention and demand for security were illegal and without authority, as the discrepancy arose solely from a default computer date-formatting error and had no bearing on the nature or value of goods transported.
  • Reliance was placed on CBIC Circular No. 64/38/2018 dated 14.09.2018, which directs that minor discrepancies not affecting tax liability should not attract proceedings under Section 129.
  • It was contended that such an inconsequential and minor mistake ought not to be visited with the huge liability of tax and equivalent penalty.

Respondent's Arguments

  • The Government Pleader contended that the petitioner had an efficacious alternative remedy of appeal under the statute and relied on Assistant Commissioner of State Tax v. Commercial Steel Limited to argue that the writ petition ought not to be entertained.
  • It was further submitted that the formatting mistake could have been purposeful for tax evasion, and being a disputed question of fact, ought not to be examined by the writ court.

Court Order/Findings

  • The Court held that despite the availability of an alternative remedy, the merits of the petitioner's contention could be examined on the facts of this case.
  • Examining CBIC Circular No. 64/38/2018, the Court found that although the exact situation did not fall squarely within the six enumerated instances, those instances showed discrepancies with no bearing on tax liability are meant to be treated as minor — the present case fell within the broader ambit of clause (d) of paragraph 5 of the Circular. All other particulars — goods, consignor/consignee, GSTIN, invoice number, HSN code and vehicle number — tallied; the date error was found insignificant and of no consequence for invoking Section 129.
  • Relying also on the Madras High Court decision in Tvl.R.K.Motors v. State Tax Officer, the Court held the imposition of tax and penalty in Ext.P6 to be perverse and illegal, warranting interference under Article 226, and quashed Ext.P6, directing fresh orders after hearing the petitioner, within thirty days.

Important Clarification

  • CBIC Circular No. 64/38/2018 is statutory in nature and binding on tax officers; discrepancies that have no bearing on tax liability and stem from bona fide/typographical errors must be treated as minor even if not literally listed among the six illustrative instances in the Circular.
  • A pure date-format mismatch (mm-dd-yyyy versus dd-mm-yyyy) between the invoice and the e-way bill, where all other details tally, does not justify detention or penalty under Section 129 of the CGST Act.
  • Availability of an alternative statutory remedy does not bar writ jurisdiction where the facts demonstrate a patently minor and inconsequential discrepancy.

Sections Involved

  • Section 129, CGST Act, 2017 — governs detention, seizure and release of goods and conveyances in transit in contravention of the Act or Rules.
  • Section 129(3), CGST Act, 2017 — provides for the final order determining tax and penalty payable, issued in Form GST MOV-09.
  • Section 168, CGST Act, 2017 — empowers the CBIC to issue clarificatory circulars, under which Circular No. 64/38/2018 was issued.
  • Section 125, CGST Act, 2017 — prescribes the residual/minor penalty applicable in cases of the kind listed in the Circular.

Decision – In Favour of

In favour of the Assessee. The Section 129(3) tax and penalty order was quashed on merits, though the matter was remanded for a fresh order consistent with the Circular after hearing the petitioner.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No. 7716 of 2021
  • Coram: The Honourable Mr. Justice Bechu Kurian Thomas
  • Date of Order: 6 April 2022

Link to Download the Order

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