GST detention and penalty need material evidence; invoice, e-way bill and consignee note can defeat Section 129 action.

Detention and penalty under GST Section 129 are not sustainable where the goods are supported by a tax invoice, e-way bill and consignee note, and the record shows no fraud or material discrepancy in the movement of goods. The commentary notes that the consignee's claim to the goods, together with the authorities' own release of the goods in its favour, undermined the basis for treating it as a different person for penalty purposes. It also states that later cancellation of registrations could not cure defects in the original detention action because those cancellations were subsequent to the invoice and movement. The impugned orders were quashed and the matter was remitted for fresh adjudication after hearing the petitioner.

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Issues: Whether the notice, penalty order and appellate order under Section 129 of the GST Act, 2017 could be sustained when the petitioner produced the tax invoice, e-way bill and consignee note and no fraud or material discrepancy in the movement of goods was established.

Analysis: The goods were accompanied by the tax invoice, e-way bill and transporter's consignee note, and the record did not disclose any discrepancy in quantity or any material showing that the documents were fraudulent. The petitioner was the consignee claiming the goods as owner, and the authorities themselves had released the goods in its favour, yet proceeded to treat it as another person and impose penalty. The subsequent cancellation of registrations did not assist the authorities because those cancellation orders were passed after the relevant invoice and movement of goods. On the material before the authorities, the show cause notice and the penalty order under Section 129(1)(b) lacked a valid basis.

Conclusion: The orders under Section 129(3) of the GST Act, 2017 and the appellate order could not be sustained and were liable to be set aside; the matter was required to be reconsidered afresh after hearing the petitioner.

Final Conclusion: The writ petition succeeded to the extent that the impugned orders were quashed and the matter was sent back for fresh adjudication on the existing record after hearing the petitioner.

Ratio Decidendi: Where the transporter's documents and tax invoice are on record, no fraud is shown, and the goods are already treated as belonging to the claimant, detention and penalty under Section 129 cannot be sustained without a rational basis supported by material evidence.

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