Ownership of goods in transit under GST determined the penalty route, making the Section 129(1)(b) order unsustainable.

Where the invoice and e-way bill accompanied the consignment and the purchase and onward supply of areca nuts were not disputed, Circular No. 76/50/2018-GST dated 31.12.2018 was treated as binding for determining ownership of goods in transit. On that basis, the consignor or consignee was to be regarded as the owner where the prescribed documents accompanied the goods, so the matter fell within Section 129(1)(a) of the CGST Act read with the IGST Act rather than Section 129(1)(b). The penalty order under Section 129(1)(b) was held illegal and quashed, with a direction to proceed under Section 129(1)(a) and release the goods and vehicle in accordance with law.

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Issues: Whether the penalty order passed under Section 129(1)(b) of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act was sustainable where the invoice and e-way bill were not disputed and the circular governing ownership of goods in transit applied.

Analysis: The invoice and e-way bill accompanying the consignment were not questioned, and the authorities did not dispute the purchase and onward supply of areca nuts. The Circular No. 76/50/2018-GST dated 31.12.2018 was treated as binding, and on that basis the consignor or consignee was to be regarded as the owner where the specified documents accompanied the goods. The case was found to fall within the regime of Section 129(1)(a), not Section 129(1)(b).

Conclusion: The penalty order under Section 129(1)(b) was illegal and was quashed, with a direction to proceed under Section 129(1)(a) and release the goods and vehicle upon payment of the penalty in accordance with law.

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