Facts of the Case:

In this case, the petitioner challenged the penalty order dated 18.10.2025 passed under Section 129, along with the detention order (MOV-06), notices in DRC-01 and MOV-07, and the consequential demand of penalty under Section 129(1)(b). The petitioner sought release of goods and the conveyance without security and protection against coercive action.

During interception, the goods were accompanied by a valid e-way bill and tax invoice, containing all particulars of the consignor, who was a registered dealer. Despite this, the adjudicating authority imposed penalty under Section 129(1)(b) treating the goods as if supplied without valid documents.

The petitioner argued that, even assuming a procedural lapse, the appropriate provision applicable was Section 129(1)(a) (penalty equal to the lesser of ₹25,000 or 2% of the value of goods for exempt goods or where tax is discharged), and not 129(1)(b) which applies where the owner of the goods does not come forward. The petitioner relied upon Halder Enterprises v. State of U.P. case, wherein the Court had quashed a similar penalty issued under Section 129(1)(b) despite the presence of proper documents.

Issue:

Whether penalty under Section 129(1)(b) is justified when the intercepted goods are accompanied by valid tax invoices and e-way bills and ownership of the goods is established, or whether the penalty must be computed strictly under Section 129(1)(a) of the GST Act?

Held that:

The Court noted that the goods were duly accompanied by a valid e-way bill and tax invoice, disclosing full particulars of the registered owner. In such circumstances, any infringement, if at all, would only attract Section 129(1)(a). The adjudicating authority erred in imposing penalty under Section 129(1)(b).

The Court relied on the earlier judgment where, in similar facts, the penalty under 129(1)(b) had been quashed and the authority was directed to recompute penalty under 129(1)(a). The impugned penalty order was set aside, and the authority was directed to re-determine the penalty strictly under Section 129(1)(a) within three weeks. Upon deposit of the penalty computed under Section 129(1)(a) based on the invoice value, the goods and vehicle were to be released forthwith.

Case Name: M/s Sen Traders Versus State of U.P. and Another dated 10.11.2025

To read the complete judgement 2025 Taxo.online 2926