Facts of the Case

M/s Century Apparels Private Ltd., a garment manufacturer with its manufacturing unit in Tirupur, moved goods from Tirupur to Tuticorin for export to Ireland on 01.09.2024. The vehicle was detained and inspected at Valayankulam Toll Plaza; while the driver stated goods were being transported from Tirupur, the e-way bill mentioned Chennai as the place of dispatch. On this ground, a penalty of 200% of the tax value was levied under Section 129(1)(a) of the TNGST Act, 2017 in Form GST MOV-09, which the petitioner paid under protest before the goods were released, and thereafter challenged the penalty order.

Issues Involved

  1. Whether a mere discrepancy in the place of dispatch mentioned in an otherwise valid e-way bill (accompanied by invoice and e-invoice) amounts to transport of goods 'without an e-way bill' justifying a Section 129(1)(a) penalty.
  2. Whether payment of penalty under protest concludes proceedings under Section 129(5), barring further challenge.
  3. Whether the order suffered from a breach of the opportunity of hearing under Section 129(4).

Petitioner's Arguments

  • The goods were accompanied by a valid export invoice, e-invoice, and e-way bill; the only defect was a typographical mismatch in place of dispatch, which was an inadvertent staff error not resulting in any tax benefit.
  • Payment was made under protest, without prejudice to the right to contest, and did not conclude the proceedings.

Respondent's Arguments

  • Under Section 129(5) of the TNGST Act, proceedings must be treated as concluded once the penalty is paid; the petitioner ought to have raised the issue only before the appellate authority, relying on the Thiruchy Royal Steels decisions.

Court Order / Findings

  • The Court found the impugned order's premise — that goods moved 'without an e-way bill' — was factually incorrect, since an e-way bill did in fact accompany the goods; only the place of dispatch was mismatched.
  • Applying Section 126 ('General disciplines related to penalty') and the maxim de minimis non curat lex, and Circular No.10/2019, the Court held that easily rectifiable, non-fraudulent documentation errors that confer no tax benefit ought not attract penalty, and the department could not demonstrate any benefit gained by mis-stating Chennai instead of Tirupur.
  • Relying on the Supreme Court's ruling in ASP Traders vs. State of Uttar Pradesh, the Court held that payment under protest signals an intention to contest and does not conclude proceedings under Section 129(5); a speaking order must still be passed under Section 129(3).
  • The Court also found a breach of Section 129(4), since the column recording whether the petitioner's objections were found acceptable was left blank, and noted that mens rea, never alleged in the SCN or order, could not be introduced for the first time in the counter affidavit.
  • The impugned penalty order was quashed and the amount paid directed to be refunded forthwith, without interest.

Important Clarification

  • A mere typographical/documentation error in an e-way bill that confers no tax benefit and is not backed by fraudulent intent falls within the 'minor breach' discipline of Section 126 and cannot attract a full Section 129(1)(a) penalty as if there were no e-way bill at all.
  • Payment of a Section 129 penalty under protest does not conclude proceedings under Section 129(5) and does not bar the assessee's right to challenge the order.

Sections Involved

  • Section 129, TNGST Act, 2017 — detention, seizure and release of goods and conveyances in transit.
  • Section 126, CGST/TNGST Act, 2017 — general disciplines related to penalty, including the minor-breach exception.

Decision – In Favour of

The writ petition was allowed in favour of the Assessee, with the penalty order quashed and the amount paid ordered refunded.

Case Details

Court: Madurai Bench of the Madras High Court
Case No.: W.P.(MD)No.3748 of 2025
Coram: Hon'ble Mr. Justice G.R. Swaminathan
Date of Order: 22.10.2025

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