Tribunal finds omission of e‑Way Bill in internal transfers is not a Section 129 offence
Thiruvananthapuram: The GST Appellate Tribunal (GSTAT), Thiruvananthapuram Bench, has set aside a penal demand imposed under Section 129 of the Central Goods and Services Tax (CGST) and Kerala Goods and Services Tax (KGST) Acts after finding that the transportation of goods between two premises of the same registered person under the same GSTIN constituted an internal stock transfer and did not attract the tax‑linked penalty.
The case arose from an incident on 13 June 2022 when goods were moved from one registered premises of an assessee to another of its own godowns. The movement was effected under a delivery challan rather than a sale invoice. During transit the consignment was intercepted on account of non‑generation of an e‑Way Bill and was detained under Section 129 of the CGST/KGST Acts. A penalty of ₹1,34,640 was levied under Section 129(3) and paid by the appellant to secure release of the goods. The first appellate authority had earlier upheld the penalty, prompting the appeal to GSTAT.
The appellant contended before the Tribunal that the movement was merely an internal stock transfer between two premises registered under the same GSTIN and did not amount to an outward taxable supply to a customer. It emphasised that the goods were transported under a delivery challan and not pursuant to any sale transaction. The appellant further argued that the mere absence of an e‑Way Bill could not establish that the transaction was non‑genuine or that there was an intention to evade tax, and relied on earlier judicial precedents dealing with similar facts.
Bench reasoning and decision
The GSTAT Bench allowed the appeal and set aside the impugned order in appeal. The Tribunal concluded that when goods are transported on a delivery challan between registered premises of the same assessee under a single GSTIN, there is no outward supply giving rise to tax liability and, therefore, the penal machinery under Section 129 — conceived for detention and confiscation in tax‑linked evasion cases — is not attracted.
"Penalty under Section 129 of the CGST/KGST Act is not leviable on a registered person for transportation of goods without an e‑Way Bill where such transportation is undertaken as a stock transfer between the registered premises of the same assessee."
The Tribunal observed that if the omission to produce documentation were to be treated merely as a documentation‑related contravention, the statutory provision for such contraventions would be Section 122(1)(xiv) rather than the punitive Section 129. The appellant had placed reliance on a number of judgments on similar issues while making this alternative submission.
Immediate implications for business and enforcement
- Clarification for taxpayers: Businesses that move goods between their own registered premises under the same GSTIN can rely on the principle that such intra‑entity transfers do not attract confiscation and Section 129 penalties merely for absence of an e‑Way Bill, subject to facts of each case.
- Enforcement practice: Field officers and audit wings will need to consider the nature of the movement — whether it is an outward taxable supply or an internal transfer under the same GSTIN — before invoking Section 129.
- Documentation caution: Although the ruling relieves registered persons from Section 129 consequences in such transfers, maintenance of appropriate records (delivery challans, supporting stock registers) remains essential to establish the factual matrix on inspection.
| Fact | Detail |
|---|---|
| Date of movement | 13 June 2022 |
| Mode | Delivery challan between registered premises under same GSTIN |
| Interception | Goods detained for non‑generation of e‑Way Bill |
| Penalty imposed | ₹1,34,640 under Section 129(3) (paid on release) |
| Tribunal outcome | Appeal allowed; Section 129 penalty set aside |
The decision provides a measured interpretation of the reach of Section 129 in cases where no tax is payable on the movement because the goods remain under control of the same taxable person. Tax practitioners in Thiruvananthapuram and across Kerala are likely to examine the full text of the order for the Bench's detailed reasoning and any guidance on evidence required to establish the nature of such transfers during routine checks or interceptions.
Given the practical implications for logistics and intra‑company stock movements, businesses should ensure that delivery challans and accompanying records clearly indicate the GSTIN and the internal transfer nature of the movement to avoid operational disruption during transit checks.
