GST transit penalty cannot stand when invoice and e-way bill accompany goods and no intent to evade tax is proved.

Penalty for detention of goods in transit under GST cannot be sustained where the invoice and e-way bill accompany the consignment and the statutory transport documents are otherwise in order. The Court found no proved contravention of the movement requirements, and the allegation that the supplier's registration was fraudulent remained unverified and had not been put to the assessee. In the absence of corroborated material showing intent to evade tax, invocation of Section 129 was unjustified. The order imposing penalty under Section 129(1)(b) was set aside.

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Issues: Whether the penalty imposed for detention of goods in transit under the GST regime was sustainable when the invoice and e-way bill accompanied the consignment and the alleged defect in the supplier's registration remained unverified; and whether the invocation of Section 129 was justified in the absence of corroborated material showing contravention or intent to evade tax.

Analysis: The goods were intercepted with the invoice and e-way bill and the statutory documents required for transportation were found to be in place. The adverse allegation that the supplier had not issued the invoice and that the registration had been fraudulently obtained was accepted without independent verification and without putting the appellants on notice of that stand. On the facts, there was no established contravention of the document-carrying requirements under the inspection provisions, and no material to show an intention to evade tax, which was necessary to sustain the penalty action. The circular on ownership for Section 129 also supported the position that the consignor or consignee would be treated as owner where the prescribed documents accompany the goods.

Conclusion: The penalty order under Section 129(1)(b) was unsustainable and had to be set aside; the appeal was therefore decided in favour of the appellants.

Ratio Decidendi: Penalty for detention of goods in transit cannot be sustained under Section 129 where the prescribed transport documents accompany the consignment, no proven contravention of the movement requirements is shown, and the revenue relies on an unverified allegation without affording notice or establishing intent to evade tax.

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