Background

On 13.06.2022 the appellant, a steel dealer, moved TMT bars under a delivery challan from its own premises to its own godown under the same GSTIN. The vehicle was detained for want of an e-way bill and penalty of Rs. 1,34,640 was imposed under Section 129(3), with no tax demand, and paid to obtain release. The First Appellate Authority dismissed the appeal, calling the transaction “not genuine”. Revenue contended that “tax payable” in Section 129(1)(a) is only a measure for computing penalty and that mens rea is not required.

Final Verdict

The Tribunal held that penalty under Section 129(1) is linked to the “tax payable on such goods”. A movement between premises of the same person involves neither a second party nor consideration, so it is not a “supply” under Section 7(1)(a), and therefore not an intra-State supply attracting the charging provision in Section 9. Following Fabricship Pvt. Ltd. (Bom HC), Vacmet India and Goverdhan Oil Mill (All HC), it held that where no tax is payable on the goods, penalty under Section 129, which is measured by that tax, cannot be levied. Revenue’s attempt to distinguish Fabricship because the goods there were exempt was rejected as a misreading of its ratio, and the “not genuine” finding was held to be unsupported by any allegation or evidence. Rule 138(1)(ii) still requires an e-way bill for non-supply movements, but the remedy for such a lapse lies only under Section 122(1)(xiv), not Section 129(3). The question of law was answered in the negative, and the Order-in-Appeal was set aside with consequential relief.