W.P.(MD) No.18970 of 2023

Facts of the Case

The petitioner, Tvl.T M Steel, a manufacturer of TMT steel and iron bars, received an order for supply of 24.990 MTS of TMT bar from Mr.T.Balaji (HUF), Tuticorin, and in turn placed a back-to-back order with M/s.Rashmi Mataliks Limited, West Bengal, with instructions to ship directly to Mr.T.Balaji. M/s.Rashmi raised an e-invoice and e-way bill dated 20.07.2023, but by a typographical error mentioned "Tvl.T.M.Steel" instead of "Tvl.T.Balaji" in the "Shipped To" column, without stating Tvl.T.Balaji's GST number, even though the correct delivery address appeared in the address field. The vehicle carrying the consignment (Registration No.TN 15 X 8024) was intercepted, and a notice in Form GST MOV-07 dated 24.07.2023 was issued detaining the goods, prompting the petitioner to approach the Madurai Bench of the Madras High Court under Article 226 for release and quashing of the detention.

Issues Involved

  1. Whether the petitioner could be penalised for a typographical error committed by the supplier, M/s.Rashmi Mataliks Limited, in the e-invoice.
  2. Whether the respondent's failure to pass a detention order within the mandatory seven-day period under Section 129(3) vitiated the proceedings.

Petitioner's Arguments

  • Counsel submitted that the mistake in the "Shipped To" column was committed solely by the supplier, M/s.Rashmi, and not by the petitioner, who had correctly been named in the "Billed To" column along with its own GST number.
  • It was argued that the goods and vehicle had been detained for ten days without any order being passed, causing damage, and that under Section 129(3) the respondent was bound to pass an order within seven days of the notice, which was admittedly not done even by the date of the hearing.

Respondent's Arguments

  • The Additional Government Pleader submitted, on instructions, that since the GST number of Tvl.T.M.Steel was also not mentioned in the Shipped To column, the discrepancy could not be treated as a mere typographical error, and opposed release of the goods.

Court Order / Findings

  • On perusing the tax invoice, the Court found the correct address of Tvl.T.Balaji appeared in the Shipped To column even though the name was wrongly stated, confirming the error was a genuine typographical mistake by the supplier and not attributable to the petitioner.
  • The Court held that the respondent's failure to pass an order within seven days of the notice, as mandated by Section 129(3), rendered the continued detention contrary to law.
  • The penalty was modified to Rs.5,000, payable by the petitioner for release of the goods, with liberty to challenge the modified penalty before the authorities and liberty to the authorities to separately proceed against M/s.Rashmi Mataliks Limited for its error. The writ petition was allowed with modification, without costs.

Important Clarification

  • An error in shipping-column details attributable to the supplier's own e-invoicing mistake, where the consignee's correct address and its own GST details are separately verifiable, will generally be treated as a typographical error rather than grounds for penalising the consignee.
  • The seven-day timeline in Section 129(3) for passing a detention order is treated as mandatory; overshooting it independently vitiates continued detention regardless of the underlying merits of the alleged discrepancy.

Sections Involved

  • Section 129, CGST Act, 2017 — detention, seizure and release of goods and conveyances in transit.
  • Section 129(3), CGST Act, 2017 — mandates that the proper officer pass an order within seven days of service of the detention notice.
  • Form GST MOV-07 — notice issued proposing penalty for detained goods and conveyance.

Decision – In Favour of

The decision is substantially in favour of the assessee, with the writ petition allowed and the penalty modified from the originally proposed amount to Rs.5,000 for release of the goods.

Case Details

Court: Madurai Bench of the Madras High Court
Case Number: W.P.(MD) No.18970 of 2023
Coram: Hon'ble Mrs. Justice S. Srimathy
Date of Order: 08.08.2023

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