Facts of the Case:

In this case, the petitioner–consigner purchased goods from M/s. VRKP Sponge and Power Plant LLP, Bellary, under a valid tax invoice, e-invoice and e-way bill dated 29.01.2023. While in transit, the driver inadvertently deviated from the usual route and reached Moodabidire, where the vehicle was intercepted by the respondent authorities on 31.01.2023. At the time of interception, all statutory documents were admittedly available and valid. No discrepancy in goods, invoice value, GST payment or e-way bill particulars was found.

Despite this, the authorities detained the goods and conveyance under Section 129 of the KGST Act on the sole allegation of route deviation, issued notice in Form GST MOV-06 / MOV-07, and imposed penalty through Form GST MOV-09 dated 01.02.2023.

The petitioner paid the amount under protest and preferred an appeal. The Appellate Authority dismissed the appeal on 22.12.2023, affirming the penalty under Section 129. Aggrieved, the petitioner approached the High Court challenging both the penalty order and the appellate order.

Issue:

Whether mere deviation or change of route, without any discrepancy in documents or evidence of intent to evade tax, can justify detention of goods and imposition of penalty under Section 129 of the KGST/CGST Act, or whether such lapse attracts only general penalty under Section 125.

Held that:

The High Court held that mere change of route, by itself, does not constitute a contravention warranting detention of goods or levy of penalty under Section 129. In the absence of any material to show intent to evade tax, invocation of Section 129 is impermissible in law.

The authorities failed to appreciate the reasonable and bona fide explanation offered by the petitioner at the earliest point of time.

Further, Circular No. 64/38/2018-GST dated 14.09.2018, issued under Section 168, is binding on the department and mandates that minor or procedural lapses should not attract Section 129 proceedings.

Accordingly, the penalty order under Section 129 and the appellate order under Section 107 were set aside. The petitioner was directed to pay only a general penalty of ₹25,000 under Section 125 of the KGST Act.

Case Name: M/s. Hysum Steel Versus The Joint Commissioner of Commercial Taxes (Appeals) -Mangaluru, The Commercial Tax Officer (Eng) – Mangaluru. Dated 05.11.2025

To read the complete judgement 2025 Taxo.online 3518