E-way bill and defective delivery challan issues led to disproportionate penalty scrutiny under goods-movement provisions

Goods movement supported by an e-way bill was nevertheless questioned because the delivery challan was defective and unsigned, and the papers produced at interception were discrepant. The discussion treats detention and penalty under the goods-movement provisions as requiring more than a mere document lapse; the presence or absence of intent to evade tax remains relevant, and the provisions are not to be applied mechanically. On the facts, a penalty at the highest statutory rate was found disproportionate, and the impugned orders were set aside for fresh consideration through a reasoned order.

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Issues: Whether penalty under section 129 was justified when the goods were accompanied by an e-way bill but the delivery challan was defective and the movement was claimed to be for a non-taxable return of machinery.

Analysis: The movement of the machine was supported by an e-way bill, but the documents produced at interception were found to be discrepant and the delivery challan was unsigned. The issue before the Authority was not merely the absence of a document, but whether such lapse justified penalty at the highest statutory rate when the movement was said to be a return after completion of work and there was no apparent intention to evade tax. The earlier decisions considered by the Court emphasised that detention under the goods-movement provisions is not to be applied mechanically, that the presence or absence of fraudulent intent is relevant, and that tax determination does not arise under section 129 in the manner of assessment proceedings.

Conclusion: Penalty at 200% was held to be disproportionate in the facts, and the impugned orders were set aside with a direction to reconsider the matter afresh by passing a reasoned order.

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