Facts of the Case

The petitioner, M/s Smart Roofing Private Limited, consigned goods from its main place of business at Chennai to its branch office premises at Sastha Mombalan Modern Rice Mill, Chintamani Road, Anuppandi, Madurai — a location which, at the time, had not yet been added as an additional place of business in its GST registration certificate (originally obtained on 02.08.2018). In the e-way bill and delivery challan, the petitioner accordingly declared the consignee address as its existing registered additional place of business at 130, Ring Road, Chintamani, Madurai, though the goods were actually meant for delivery to the new premises. On this mismatch, the consignment along with the lorry bearing registration No.TN 50 S 0022 was detained on 22.03.2022. A show cause notice dated 23.03.2022 was issued, to which the petitioner replied on 25.03.2022, culminating in the impugned order dated 25.03.2022 in Form GST MOV-09 imposing a penalty of Rs.2,50,387/- each under CGST and SGST, totalling Rs.5,00,774/-, under Section 129(3) of the CGST Act, 2017. The petitioner challenged this order by way of a writ petition, also seeking release of the vehicle and consignment.

Issues Involved

  1. Whether the penalty under Section 129(3) of the CGST Act, 2017 was warranted where the consignor and consignee were the same taxable entity (head office and branch) and the address mismatch arose only because the new branch location had not yet been formally added to the GST registration.
  2. Whether the alternate remedy of appeal under Section 107 CGST/SGST Act barred entertaining the writ petition.

Petitioner's Arguments

  • There was no intention to evade tax; the e-way bill was generated by declaring the consignee as the petitioner's existing registered additional place of business.
  • Steps had already been taken, ex post facto, to amend the GST registration to include the new place of business at Sastha Mombalan Modern Rice Mill.
  • In these circumstances, imposition of penalty under Section 129(3) of the CGST and SGST Acts was unwarranted.

Respondent's Arguments

  • The petitioner had an alternate remedy of appeal under Section 107 of the CGST Act, 2017/SGST Act, 2017, and therefore the writ petition lacked merit.

Court Order/Findings

  • The authorities were justified in detaining the goods inasmuch as there was a wrong declaration in the e-way bill.
  • However, the facts showed that the consignor and the consignee were one and the same entity — the head office and its branch office — and the registration certificate had since been amended to include the new place of business.
  • Considering that there was only a technical breach and no intention to evade tax, the impugned order was quashed and the writ petition allowed.
  • The respondent was directed to release the vehicle and the consignment to the petitioner, if not already released. No costs were awarded.

Important Clarification

  • Where the consignor and consignee under an e-way bill are, in substance, the same taxable person operating through a head office and branch, an address discrepancy arising from a new place of business not yet reflected in the GST registration (subsequently cured by amendment) amounts to a technical breach, not an attempt to evade tax.
  • Penalty under Section 129(3) of the CGST Act is meant to address instances of tax evasion, not bona fide procedural lapses of this nature.

Sections Involved

  • Section 129(3), CGST Act, 2017 – provides for imposition of penalty on detention, seizure and release of goods and conveyances in transit.
  • Section 107, CGST Act, 2017 – provides the appellate remedy against orders passed under the Act.
  • Form GST MOV-09 – the prescribed order for imposition of penalty following detention of goods.

Decision – In Favour of

The decision is in favour of the Assessee. The penalty order was quashed and the vehicle and consignment ordered to be released.

Related Case Laws

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

Case Details

  • Court: Madras High Court, Madurai Bench
  • Case No.: W.P.(MD) No.5720 of 2022 (with W.M.P.(MD) No.4567 of 2022)
  • Coram: Hon'ble Mr. Justice C. Saravanan
  • Date of Order: 30 March 2022

Link to Download the Order

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