Section 129 of the CGST Act, 2017 – Goods in Transit -–- The petitioner challenged the adjudicating order and the Appellate order passed under Section 67(2) read with Section 129 of the Act. The goods of the petitioner were seized on 22nd February, 2022 under the provision of Section 67(2). The e-way bill had already expired on the date of inspection and seizure. The adjudicating authority opined that the goods were transported and stored while they were in transit in contravention of Section 129 and calculated the applicable penalty under Section 129 (1) (a) of the Act. The petitioner contended that the initial seizure was made under Section 67(2) of the Act whereas the penalty has been imposed under Section 129 of the Act. The court observed that the goods were not seized while in transit. They were seized from a godown, two days after the expiry of the e-way bill. The petitioner submitted that due to shortage of space for storage of such huge quantity of goods, the petitioner stored the goods in a separate godown which, inadvertently, was not mentioned in the e-way bill. It does not appear that the petitioner had the intention to evade tax as the petitioner already paid the taxable amount. A single consignment of goods cannot be held to be stored in the godown and to be in transit, simultaneously, at the same time. The petitioner was certainly at fault in not recording the additional godown at the time of generation of the e-way bill, but at the same time, the petitioner ought not to be penalized with two hundred percent penalty for such trivial offence. It does not appear that the authority acted in accordance with the appropriate legal provisions and instead penalised the petitioner in a mechanical manner without proper application of mind.

Held that:- The Hon’ble High Court set aside the impugned order of the adjudicating authority and the appellate forum and directed the respondent authority to refund the amount collected from the petitioner as penalty positively within four weeks. It will, however, be open for the authority to assess the penalty, if any, payable by the petitioner for offloading goods and storing the same at a place not mentioned in the e-way bill.