Transit detention penalty cannot apply to goods found in a godown after e-way bill expiry; correct statutory basis is essential.

Goods found stored in a godown after expiry of an e-way bill cannot be penalised under the transit detention provision, because that provision applies only to goods in actual transit. The legal scheme distinguishes between inspection or search of premises and detention or seizure of goods and conveyances in transit, so the authority must invoke the provision matching the actual place and manner of seizure. A shifting basis between premises-search and transit-detention provisions, without a consistent statutory foundation, indicates non-application of mind. The note also records that there was no material showing intent to evade tax or any mismatch in the identity of the goods, making the transit penalty unsustainable.

---

---

Issues: Whether goods seized from a godown after expiry of the e-way bill could be subjected to penalty under the transit detention provision, and whether the authorities could shift between the provisions relating to inspection and search of premises and detention of goods in transit.

Analysis: The goods were not intercepted on the move but were found stored in a godown after the e-way bill had expired. The legal scheme differentiates between inspection, search and seizure of a place where goods are stored and detention or seizure of goods and conveyances in transit. The authority initially proceeded on one footing and later shifted to another, without consistently identifying the correct statutory basis for the action. A single consignment cannot be treated as simultaneously lying in a godown and being in transit. The record also did not show any intention to evade tax or any failure in identity of the goods linked to the expired e-way bill. The imposition of the transit penalty was therefore based on an erroneous application of the statutory provisions and reflected non-application of mind.

Conclusion: The penalty under the transit provision could not be sustained for goods seized from a godown, and the impugned orders were liable to be set aside in favour of the petitioner.

Ratio Decidendi: Goods seized from a godown cannot be penalised under the statutory provision meant for detention of goods in transit; the authority must invoke the provision that corresponds to the actual place and manner of seizure.

---