Facts of the Case:

In this case, the goods in question were in transit from Gujarat to West Bengal in a bill-to-ship-to transaction and were accompanied by a valid tax invoice, e-way bill, and railway receipt (R.R.). During transit, the goods were intercepted and seized solely on the ground that one digit of the PIN code of the ‘ship-to’ party was incorrectly mentioned on the invoice, although the entire address was otherwise correct.  No discrepancy was found in any statutory document. The petitioner submitted a reply, but the authorities proceeded to impose a penalty of ₹21,98,870 under Section 129(3). To avoid delay, the petitioner deposited the penalty for release of goods and subsequently filed an appeal, which was dismissed without adequate consideration of the binding circular and material facts.

The petitioner argued that the error was a purely technical and inadvertent human error, and relied on Circular No. 64/38/2018-GST dated 14.09.2018 issued by the CBIC, which clearly states that proceedings under Section 129 must not be initiated where the PIN code is incorrect but the address is otherwise correct, subject to the condition that such error does not impact the e-way bill’s validity period.

Issue:

Whether goods accompanied by all valid documents, but containing an incorrect PIN code in the ‘ship-to’ address, while the full address is correct can be subjected to seizure and penalty under Section 129(3) of the CGST Act, despite the CBIC’s binding circular expressly prohibiting initiation of such proceedings for this type of clerical error.

Held that:

The High Court held that the proceedings initiated under Section 129 were wholly unsustainable. The Court noted that the goods were accompanied by all proper and prescribed documents and that the only discrepancy pointed out was the incorrect PIN code. Relying on Clause 5(b) of the CBIC Circular dated 14.09.2018, the Court observed that when the address of the consignor/consignee is correct and only the PIN code is incorrect, proceedings under Section 129 “may not be initiated.” It further held that departmental circulars are binding on the authorities, as reaffirmed by the Supreme Court in Usha Martin Industries.

The Court emphasized that there was no intention to evade tax, and the minor technical error did not justify seizure or imposition of penalty. Since no other discrepancy existed in any of the transportation documents, the initiation of proceedings itself was contrary to the statutory scheme and the CBIC’s directives.

Accordingly, the High Court allowed the writ petition, set aside the impugned orders, and directed that any amount deposited by the petitioner be refunded in accordance with law.

Case Name: M/s Ashok Kumar Maganbhai Patel Versus State of UP and 3 Others dated 25.11.2025

To read the complete judgement 2025 Taxo.online 3091