TaxTMI 
TaxTMI 
2026 (10) TMI 370
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....ption, quality and quantity of the goods matched the accompanying documents. However, two tax invoices, UPD230021419 and UPD230021420, and their corresponding e-way bills showed the buyer's address as "Jain Transport Group, M.G.H. Road, Jodhpur, Rajasthan - 342003". The updated GST-registered address was "G-2, Shastri Nagar, Jodhpur, Rajasthan - 342003". 3. Proceedings under Section 129(3) were initiated on the ground that the address discrepancy violated Section 31, Rule 46 and Rule 138 of the CGST/UPGST Rules. A show cause notice dated 16.02.2024 was followed by the Order-in-Original dated 17.02.2024, imposing an IGST penalty of Rs. 1,80,254/-. The Appellant challenged that order before the First Appellate Authority. Respondent No. 2, the Additional Commissioner Grade-II, Appeals-III, Noida, dismissed the appeal by Order-in-Appeal No. ZD091024405657E dated 24.10.2024. The authority held that Section 129 imposes strict liability and does not require proof of an intention to evade tax. Grounds of appeal 4. The Appellant has challenged the Order-in-Appeal before this Tribunal on the following grounds: 5. a) The Appellant submits that the address error was clerical and un....
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....upported by proper tax invoices, valid e-way bills and bilty documents. He stated that the full IGST had been paid to the Government. According to him, the ERP system had automatically filled in or retained the former VAT address of Trade Victor, a long-standing buyer. There was no difference in the quantity, quality or value of the goods. There was also no allegation of clandestine removal or unloading at an unauthorised location. Relying on settled law, he submitted that a minor typing error, without any intention to evade tax, could not attract a penalty of 200 per cent under Section 129. 7. The Department's Authorised Representative supported the challenged orders. He submitted that the buyer had not declared "Jain Transport Group, MGH Road" as either its principal or additional place of business on the GST portal. He therefore contended that the goods were being transported to a location that was not bona fide, in violation of Section 129. The Department also relied on decisions holding that Section 129 imposes strict statutory liability. 8. In reply, the Appellant's counsel stated that VAT Form-03 recorded M.G.H. Road, Jodhpur as an established branch address of Trade V....
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....ls up to date. The nature of an error and its legal consequence must, however, be examined separately. 12. Section 129(1) applies to goods transported or stored in transit in violation of the Act or Rules. Under clause (a), where the owner comes forward, the penalty for taxable goods is 200 per cent of the tax payable. Section 129(3) requires a notice specifying the penalty, followed by an order. Subsection (4) requires an opportunity of hearing. After the amendment, this penalty is separate from the tax liability on the supply. Its validity must be examined under the provision that authorises it. Payment of tax on the supply does not, by itself, remove every transit penalty. 13. Section 125 provides for a residual penalty. Section 126 protects qualifying minor breaches and documentary mistakes that can readily be corrected and involve neither fraud nor gross negligence. It also requires proportionality and a fair process. Its Explanation deals with the Rs. 5,000 tax threshold and errors apparent from the record. However, subsection (6) excludes penalties fixed as a sum or percentage. Section 126 therefore does not give us an unrestricted power to reduce a valid penalty under....
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.... does not permit a tribunal to ignore a later law that imposes mandatory civil liability when specified conditions are met. 18. In Union of India v. Dharamendra Textile Processors, (2008) 13 SCC 369, the Supreme Court stated the other applicable principle. Criminal means rea cannot automatically be read into a civil penalty provision, and a mandatory statutory consequence cannot be set aside by assuming a discretion that the law does not give. Similarly, Guljag Industries v. Commercial Taxes Officer, (2007) 7 SCC 269, concerned mandatory transit declarations under Rajasthan sales-tax law. It recognised civil penalty liability without separate proof of means rea. The Department's argument on strict liability must therefore be considered. It cannot be rejected merely because the omission was unintentional. 19. These decisions still require the statutory conditions for a penalty to be proved. In Union of India v. Rajasthan Spinning & Weaving Mills, (2009) 13 SCC 448, particularly paragraphs 23 and 24, the Supreme Court explained that the mandatory penalty under Section 11AC applied only when its conditions were met. That case concerned excise law, not Section 129. It nevertheles....
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.... 23. CBIC Circular No. 64/38/2018-GST dated 14.09.2018 was issued under Section 168. Paragraph 5 gives a non-exhaustive list of documentary errors for which proceedings under Section 129 should not be initiated when the required documents accompany the goods. Clause (c) covers an error in the consignee's address where the locality and other consignee details are correct. Paragraph 6 prescribes a penalty of Rs. 500 each under CGST and SGST, or Rs. 1,000 under IGST, per consignment. The total amount applicable to this inter-State movement is therefore not Rs. 500. 24. The two addresses here are M.G.H. Road and G-2, Shastri Nagar. A common PIN code alone does not establish that the locality was correctly stated for clause (c). Earlier VAT registration also does not establish current GST registration of the premises. We therefore do not base the decision entirely on the assumption that clause (c) is satisfied. The circular helps distinguish minor errors from substantive transit violations. Our independent basis is the factual explanation considered in light of the jurisdictional High Court decisions. We do not presume the existence of any Uttar Pradesh circular adopting the CBIC c....
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....tified. 29. The First Appellate Authority treated "strict liability" as a sufficient answer to the explanation. This confuses the rule about intent with the need to prove a breach that attracts the particular penalty. Guljag Industries concerned a material failure to complete the prescribed transit declaration. It does not require every mistake in existing documents to be treated in the same way. Applying Hawkins Cookers and Zhuzoor Infratech to these facts, along with the Supreme Court's approach in Satyam Shivam Papers, we find that the error was bona fide and without any intention to evade tax. The penalty under Section 129 therefore cannot be sustained. 30. This finding does not create a general exemption for wrong addresses or reduce a valid penalty of 200 per cent on equitable grounds. A deliberate change of destination, an unidentified consignee or a material gap in the supporting documents may justify a different result. Here, the explanation and the matching goods distinguish the case from substantive evasion or a complete disregard of transit documentation. There is therefore no question of reducing the penalty percentage under Section 126(6). The demand fails becau....