2025 (8) TMI 461 - HC - GST

Petitioner Complied with Rule 138A CGST; Detention Proceedings under Section 129 Quashed for Lack of Proper Grounds

The HC held that the petitioner complied with the statutory requirements under Rule 138A of the CGST Rules by possessing both the invoice and E-way bill ... Challenge to proceedings initiated u/s 129 of the CGST Act - detention of certain goods transported by the petitioner - sufficient compliance of the statutory requirement contemplated under Rule 138A of CGST Rules or not - HELD THAT:- The proceedings under Section 129 were sought to be initiated only in view of the fact that the petitioner failed to produce the invoice evidencing the purchase of the petitioner from the unregistered dealer. However, as the vehicle was intercepted during transit from the registered premises of the petitioner to the purchaser of the article from the petitioner, the obligation of the petitioner was to ensure that such transit was accompanied by the documents as contemplated under Rule 138A, which are, invoice issued by the petitioner as well as the E-way bill generated pertaining to the said transportation. Admittedly, at the time of interception, as evidenced by Ext.P2, both the said documents were in existence. As far as the statement referred to by the learned Government Pleader is concerned, the same is a disputed fact. As in none of the notices issued, such an allegation is raised, while considering the sustainability of the notices impugned in this case is being considered, the same cannot have any significance. If such a discrepancy was there, that should have been reflected in the notices impugned in this writ petition. Since such a discrepancy was never highlighted in any of the notices/orders/statements the same cannot be pointed out by way of subsequent documents. The proceedings initiated as per the impugned notices are not legally sustainable and therefore, an interference is required. Accordingly, this writ petition is disposed of, quashing Exts.P2, P2(a), P2(b) and P3. ISSUES: Whether the detention and initiation of proceedings under Section 129 of the CGST Act are legally sustainable when the consignment is accompanied by an invoice and an E-way Bill as required under Rule 138A of the CGST Rules.Whether failure to produce a document evidencing purchase from an unregistered dealer justifies the initiation of proceedings under Section 129 during transit from the registered premises of the consignor to the purchaser.Whether a statement by the driver alleging late availability of the E-way Bill can sustain the proceedings if such discrepancy is not mentioned in the statutory notices issued under the CGST Act. RULINGS / HOLDINGS: The court held that the proceedings under Section 129 are not legally sustainable where the consignment was accompanied by the invoice and the E-way Bill as contemplated under Rule 138A of the CGST Rules, since these documents constitute sufficient compliance of the statutory requirements.The court ruled that the obligation of the consignor during transit is limited to ensuring that the consignment is accompanied by the invoice issued by the consignor and the E-way Bill generated by the consignor, and failure to produce a document evidencing purchase from an unregistered dealer does not justify initiation of proceedings under Section 129.The court found that the driver's statement about the E-way Bill being made available later is a disputed fact and cannot be given significance as it was not reflected in any of the notices or orders issued under the Act; thus, such a discrepancy cannot be relied upon to sustain the proceedings. RATIONALE: The court applied the statutory framework under the CGST Act and CGST Rules, specifically Section 129 of the CGST Act dealing with detention, seizure and release of goods and conveyances in transit, and Rule 138A of the CGST Rules which mandates the consignment to be accompanied by an invoice and E-way Bill.The court emphasized that the statutory notices initiating proceedings must specify the grounds for detention and that any alleged discrepancies not mentioned therein cannot be subsequently relied upon to justify detention or penalty proceedings.The judgment reflects a strict adherence to procedural fairness and statutory compliance, rejecting reliance on extraneous or unnotified allegations to sustain enforcement actions.