The Allahabad High Court quashed a detention order issued under Section 129 of the GST ( Goods and Services Tax ) Act, finding that the expiry of an e-way bill due to a driver’s detour was insufficient grounds for such action. It observed that intention to evade tax is necessary for invoking Section 129. The petitioner, engaged in the manufacturing and supply of LD Polythene Sheets and Bags, had dispatched goods on August 5, 2021, with the necessary tax invoices and transport documents.

However, the goods were detained on August 9, 2021, because the e-way bill had expired. The petitioner explained that the truck driver had taken an unscheduled detour without notifying the consignor or consignee. Get a Copy of GST Ready Reckoner, Click here Despite presenting an amended e-way bill on the following day, the authorities seized the goods and imposed a penalty on August 17, 2021. This decision was upheld even though the petitioner’s appeal was rejected and the evidence showed no discrepancy in the quantity of goods or intention to evade taxes. The bench of Justice Piyush Agrawal noted that the respondent’s actions did not meet the criteria for invoking Section 129, which requires a demonstration of intent to evade tax. Citing the judgment in Shyam Sel and Power Ltd. Vs. State of U.P., the Court emphasized that Section 129 should be read in conjunction with Section 130, which necessitates proof of tax evasion intent. Since no such intent was established, the use of Section 129 was deemed inappropriate. Get a Copy of GST Ready Reckoner, Click here

In the case of Shyam Sel and Power Ltd. Vs. State of U.P., the court observed that “Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the CGST Act. Section 129 of the CGST Act must be read with section 130 of the said Act, which mandate the intention to evade payment of tax. Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts & circumstances of the present case.” Get a Copy of GST Ready Reckoner, Click here The Court ruled that the detention order was unsustainable and thus quashed it. The petitioner is entitled to a refund of any amount deposited during the pendency of the writ petition, which should be processed within a month of presenting the certified copy of the order. To Read the full text of the Order CLICK HERE