OXINO PEB PRIVATE LIMITED vs Deputy CommissionerII Legal Cell O/o The Commissioner State GST Department, Assistant State Tax Officer (Intelligence)

GOODS AND SERVICES TAX APPELLATE TRIBUNAL
ERNAKULAM BENCH
Division Bench :: Court No. I

APPEAL NO: APL/50/ERN/2026
[Arising out of OIA GSTA 93/2020 dated 18/12/2021 passed by the Joint Commissioner
(Appeals), SGST Department, Palakkad]


OXINO PEB PVT LTD, PALAKKAD
.............Appellant

Versus
COMMISSIONER OF SGST, KERALAM
..........Respondent

for Appellant for Respondent
Shri P.S.Soman Pulladan, Advocate Shri Anil Gopinath, AR

CORAM:
Hon’ble Shri Subramanya Rayaprol, Vice President
Hon’ble Shri Ramamoorthi Sriram, Member (Technical)
…………………………………………………………………………………………………
FINAL ORDER NO: 23/EKM/KERALAM/2026

Date of Hearing: 06-10-2026
Date of Order 30-10-2026

Order per: Shri Ramamoorthi Sriram, Member (Technical)

1.0 The present Appeal (APL/50/ERN/2026) has been preferred by M/s Oxino PEB
Pvt Ltd (GSTIN 32AAFCV2273E2ZL) (Appellant) against Order-in-Appeal No. GSTA
93/2020 dated 18/12/2021 passed by the Joint Commissioner (Appeals), SGST
Department, Palakkad (Appellate Authority).


Page 1 of 13

Questions of law:
1.1 Whether any penalty under section 129(1) of CGST Act can be proposed without
specifying the provisions of the Act or Rules that have been contravened?
1.2 Whether penalty section 129(1) of CGST Act is leviable on goods that have been
sent for job work?

2.0 Brief Facts of the Case:
2.1 . Intelligence Squad No, V, State GST Dept. Palakkad intercepted vehicle No.TN
30 Q 7788 at Kanjikkode at 4.l5 p,m on 17.07.2020. The goods under transport, HR
sheets, were being transported from M/s.Kummenchery Steels, Trippunithura for
supply to M/s Oxino PEB Pvt Ltd. It is alleged that at the time of interception, the
goods were being unloaded in the premises of a dealer viz. M/s Vera Display and
Storage Products Pvt. Limited, Kanjikkode. It is also alleged that no documents
supporting the supply to M/s Vera Display and Storage Products were available at the
time of interception and no Eway Bill was seen generated to this effect. The Asst State
Tax officer initiated action under section 129(3) of the SGST and CGST Act 2017 /
section 20 of the IGST Act and issued notice affording an opportunity to show cause
if any, against the action and for personal hearing. The consignment was released on
provisional basis on 21.07.2020 by furnishing Bank guarantee for Rs. 309,292.00 and
Bond as provided under the Law.
2.2 OIO no VC/V88/2020-21 dated18/8/2020 was passed by AC, Squad no 5
confirming the demand of SGST Tax Rs 77,323.00, SGST penalty Rs.77,323.00,
CGST Tax Rs.77,323.00 and CGST penalty Rs.77,323.00 on M/s Oxino M/s PEB.
Security furnished by way of Bank Guarantee was ordered to be encashed and
adjusted against the above said demand of tax and penalty.
2.3 Appeal filed by the appellant against the said OIO was dismissed vide the
impugned OIA. Aggrieved by the above OIA, the appellant has filed this appeal before
the Tribunal.

3.0 Grounds of Appeal / Submissions of the Appellant:
3.1 The order passed in a hurry-burry and with unwarranted haste. The hearing as
part of the adjudication was completed in the evening of 17-08-2020. Order was
passed on the very next day 18-08-2020.
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3.2 The Appellant has produced so many valuable documents to prove that the
transaction is genuine. None of the said documents were considered and discussed in
the order. From the order itself it is discernible that everything is pre-determined.
3.3 The goods were unloaded and kept at the premises of M/s. Vera Display and
Storage Products Pvt. Ltd., Kanjikode at the time of detention. As such the invoking of
Section 129 in this case is without authority of law. Section 129 does not confer such
a power to the State Tax Officer Intelligence. Even if any tax evasion is suspected, the
proper course of action to be initiated is under Section73/74 of the CGST/SGST Act.
The State Tax Officer has passed the adjudication order against the Appellant for
technical reasons. It is trite in law that before imposing penalty mensrea to evade tax
should have been established with positive evidence. In this case no such finding is
arrived at before imposing the penalty and demanding tax.
3.4 The first appellate authority confirmed the adjudication order and dismissed the
first appeal for the technical violation of non-accompanying the E Way bill for job work.
The question of evading the tax was not at all considered and discussed in the first
appellate order. The law declared by the Apex Court as well as the various High Courts
in this respect were not at all considered and discussed in the appellate order. Non
application of mind is writ large in the appellate order. For that reason alone,
interference from the Honorable Tribunal is warranted in this case.
3.5 In the MoV-07 the only reason for initiating action under Section 129 is mentioned
as "the vehicle with the goods intercepted at Vera Display and Storage Products
Private Limited, Kanjikode while unloading the goods. On verification of the
accompanying documents, it is seen that an invoice No. KSB/72L/HR/447
dtd.17/07/2020 of Kummencherry steets, Kochi and e-way bill No.53118793 dtd
17/7/2020 / 11.07 am to Oxino PEB Private Limited were available. The driver/person
in charge of the vehicle failed to produce documents for unloading the goods at Vera
Display and Storage Products Private Limited, Kanjikode. Hence it is in contravention
to the provisions of the Act & Rules...". In the impugned adjudication order the decision
arrived at by the adjudicating officer is that "the above transport was in contravention
of the provisions of the Act and the rules made there under. Transport in contravention
of the provisions of the Act require actions as provided in Section 129 of the
CGST/SGST or section 20 of the Integrated Goods and Service Tax Act. In the
circumstances the following orders are passed." Neither in the MOV-07 nor in the
adjudication order there is any allegation of attempt to evade tax committed by the
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Appellant. The only allegation is that the Appellant violated the provisions of the Act.
Unless and until there is specific allegation of attempt to evade tax and the said
allegation is substantiated with positive evidence, no action under Section 129 can be
invoked against the Appellant. In other words, any infraction of the provisions of the
Act is not actionable under Section 129 unless such infraction is coupled 'with an intent
to evade tax. Mensrea to evade tax must be established. The law in this respect is
crystallised by the decisions of the Supreme Court as well as various High Courts.
3.6 The vehicle was detained at 04-15 P.M and Mov-07 was issued on the same date
directing the Appellant to appear before the detaining authority on 21-07-2020 at 11.00
AM. The Appellant generated E-Way bill No.5911 89898714 on 17-07-2020 for the
transport from Oxino Peb Private Limited to Vera Display and Storage Products Private
Limited ato7-20 pm (Within 3 hours)
3.7 In Falguni Steels V. State of UP [2024] 124GSTR10(All) the Allahabad High Court,
in an exactly similar case, has held that the generation of E Way bill post detention and
production of the same before passing the penalty order is sufficient compliance and
no penalty is sustainable if the goods are transported with all other sufficient
documents. In the present case, Appellant has transported the goods with all the
sufficient documents and the E Way bill was generated and produced before the
Assistant State Tax officer before passing the penalty order. As such the impugned
order is illegal and unsustainable.
3.8 In a similar case the High Court of Allahabad had directed the release of the goods
and vehicle in Singh Tyres vs State of UP [2018]56 GSTR 38(All) . Based on the above
decision and also based on the fact that the Appellant had complied with the statutory
formality within the time allowed by the Assistant Enforcement officer, the Enforcement
officer ought not to have imposed the penalty and released the Bank Guarantee.
3.9 The goods were transported with e-way bill generated from the department site. lt
is a valid document for transportation of the goods as per Rule 138A of the CGST
/SGST Rules. Since the transaction is already declared in the department site, there is
no scope for any tax evasion. As such the maximum penalty that can be levied for
technical breach, if any, is Rs. 10,000/- only in terms of Section 122(3(e) of the CGST/
SGST Act.
3.10 Shri P.S.Soman Pulladan Advocate , learned advocate arguing for the appellant,
pressed the above points.

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4.0 Submissions of the Respondent /AR
Shri Anil Gopinath , learned AR submitted as follows:
4.1 a. Section 129(1) of the CGST/KSGST Act, 2017 mandates that notwithstanding
anything contained in the Act, where any person transports any goods or stores any
goods while they are in transit in contravention of the provisions of this Act or the rules
made thereunder, all such goods and conveying vehicles shall be liable to detention
or seizure.
b. In the present case, the Tax Invoice and E-Way Bill produced at the time of
interception exclusively authorized movement from M/s. Kummenchery Steels,
Irumpanam to M/s. Oxino PEB Pvt. Ltd., Kanjikode.
c. Unloading goods at M/s. Vera Display & Storage Products Pvt. Ltd. without a
Delivery Challan under Rule 55(1) or an EWay Bill under Rule 138 for job work
movement violates Section 31 read with Rule 45. Rule 45 explicitly mandates that
inputs or capital goods shall be sent to a job worker under the cover of a Delivery
Challan issued by the principal.
d. At 04:15 PM on 17.07.2020, zero documentation existed to justify the presence of
21,800 kg HR Sheets at M/s. Vera Display. Hence, contravention under Section 129
was complete upon physical inspection. The reason for interception of the vehicle
while unloading is that the officer while checking the vehicle number and e-way bill on
the GS TN portal it was seen that place of delivery shown in the e-way bill is different
from the place of unloading. The person in charge of the vehicle could not provide any
document to prove that the goods were unloaded there for Job work.
4.2 a. The Appellant argues that penalty under Section 129 cannot be sustained
without establishing 'mens rea' or deliberate intent to evade tax, citing various High
Court rulings. The Revenue submits that Section 129 is a self-contained, strict liability
administrative procedure for enforcement of physical transport compliance.
b . Unlike Section 74, which specifically requires 'reason of fraud, or any willful-
misstatement or suppression of facts', Section 129 operates on objective, verifiable
physical contravention ('transports any goods... in contravention of the provisions').
Once the physical contravention (unauthorized unloading at an unlisted location
without job work documents) is established, civil liability under Section 129 attaches
automatically. Furthermore, M/s. Vera Display is registered as both a job worker and
a trader under GST. Unloading goods at a trader's premises without documents
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creates an unrecorded supply channel, directly threatening tax revenue . The risk of
leakage and suppression of taxable turnover is imminent and real.
4.3 a. The Appellant's contention that the Revenue ought to have proceeded under
Section 73 or 74 instead of Section 129 is legally flawed. Section 129 begins with a
non-obstante clause ('Notwithstanding anything contained in this Act'). It specifically
governs goods in transit or stored in transit . Here the goods are intercepted while
unloading and storing the goods at a traders premises (unauthorized unloading and
storage while in transit at an unlisted location without job work documents) . Section
73/74 governs determination of tax not paid or short paid in regular audit/assessment
proceedings. When goods are physically caught in contravention during transport,
Section 129 is the exclusive statutory mechanism.
b. The judicial precedents relied upon by the Appellant (e.g., Satyam Sivam Papers,
Falguni Steels, Varun Beverages, T P Metals) pertain to minor clerical errors,
typographical mistakes in vehicle numbers, or expired validity by a few hours where
goods matched the invoice and destination. In sharp contrast, the present case
involves unloading 21.8 tonnes of steel at an entirely different entity's premises without
any delivery challan or job work documentation. It is a substantive breach, not a minor
technical error.
c. The adjudication order passed on 18.08.2020 was issued after due personal hearing
on 17.08.2020 and thorough evaluation of all submissions. The statute does not
prescribe a mandatory waiting period before issuing an order post-hearing; prompt
adjudication reflects administrative efficiency, not pre-determination.

5 Discussions and Findings:
5.1a. On perusal of the SCN we find that the only allegation against the appellant is
that :
The driver / person in charge of the vehicle failed to produce documents for unloading the
goods at Vera Display and Storage Products Pvt Ltd Kanjikode. Hence it is in contravention
of the provisions of the Act & Rules and tax and penalty demanded thereon.
In view of the above, the goods and the conveyance used for the movement of goods were
detained under sub section 3 of section 68 of the CGST Act 2017 and subsection 1 of section
129 of the CGST Act 2017 read with sub-section (3) of Section 68 of the State / Union Territory
Goods and Services Tax Act, 2017 or under Section 20 of the Integrated Goods and Services
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Tax Act, 2017 read with sub-section (3) of Section 68 of the Central Goods and Services Tax
Act, 2017
b. Section 129 (1) reads as follows:
Notwithstanding anything contained in this Act, where any person transports any goods or
stores any goods while they are in transit in contravention of the provisions of this Act or the
rules made thereunder, all such goods and conveyance used as a means of transport for
carrying the said goods and documents relating to such goods and conveyance shall be liable
to detention or seizure and after detention or seizure, shall be released…….
c. Thus it is clearly established that section 129(1) of the CGST / SGST can be invoked
only when there is a contravention of the Act / Rules. On perusal of the SCN we find
that there is no mention whatsoever of the specific provisions of the Act / Rules which
have been contravened in the instant case. We categorically hold that when there is
there is no mention of the specific section of the Act / Rules that have been
contravened, section 129 cannot be invoked.
d. We find support for our contention in the judgement of the honorable Supreme Court
of India in the case of M/s Armour Security (India) Ltd v Commissioner, CGST, Delhi
East Commissionerate, [2025] 177 taxmann.com 478 (SC), wherein the honorable
clearly upheld the following principles as laid out in other decisions of the Supreme
Court:
It is well settled that unless the foundation of the case is made out in the show- cause notice,
Revenue cannot in Court argue a case not made out in its show-cause notice……… [(C.C.E.,
Bhubaneswar-1 vs M/S. Champdany Industries Ltd – para 50 )]
if there is no invocation of the concerned rules in the show-cause notice, it would not be open
to the Commissioner to invoke the said Rule.” [Commissioner of Central Excise, Nagpur
v.Ballarpur Industries Ltd. MANU/SC/3595/2007 :]
e. The Court went on to state that :
From the above exposition of law, we can safely conclude that a show cause notice delineates
the scope of the proceedings in the expression of subject matter with which the authority would
be dealing. It would be impermissible for an authority to invoke such rules, claims or grounds
at a later stage which do not figure in the show cause notice. That is to say, any ground,
reasoning or claim which does not figure out in the show cause notice cannot be permitted to
adversely affect the noticee.
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f. We find that contravention of the provisions of the Act / Rules is a a sine qua non for
invocation of section 129(1) of the CGST Act /SGST Act. We find that the SCN does
not specify the contraventions of the Act / Rules and in the absence of any such recital,
section 129(1) is not invokable in the instant case and the proceedings are void ab
initio for this reason alone.
5.2 a. On perusal of the OIO it is seen that there is a finding to the effect that:
M/s Oxino PEB …..had sent the goods said to be for job work to M/s. Vera Display and Storage
Products Pvt Ltd', Kanjikkode but did not generate any documents required while sending the
goods for job work- or taxable supply as provided under section 143 (1) or 31, Rule 45(1), 46
and/or Rule 55 . Hence transport of goods in contravention of the Act is established and proved
here.
As the dealer had wilfully violated the Section 129 of CGST & SGST Act 2017 read with Rule
Rule 138, and thereby invited themselves the mandatory penal process under section 129(3) of
the CGST Act 2017 read with Section of the IGST Act 2017
b. However, on careful reading of the SCN issued under section 129(3) of the CGST Act, we
find that none of these sections [143 (1) / 31/ 138] or Rules [45(1)/ 46/ 55] / breach thereof
has been cited in the SCN with the result that the appellant was left in the dubious position
of defending himself against charges which were not intimated to him in the notice. We
therefore find that the entire OIO is vitiated by a glaring breach of the principles of natural
justice and for this reason also the proceedings are liable to be declared null and void.

6 .Having analysed orders on the touch stone of natural justice, we now proceed to
analyse the the OIO on merits.
6.1 a . We find that para 4 in page 4 of the OIO reads as follows:
Evidences for transfer of 21,800 Kg steel to M/s.Vera Display and Storage Solutions
Kanjikkode for job work was furnished by the appellant on 17.08.2020 and E way Bill No.5911
89 8714 dated l7/7/2020 M/s, Vera Display and Storage Products Pvt Ltd , for Job work was
seen generated at 07.20 pm , whereas the time of interception of vehicle with goods was 4.15
pm which means the E way Bill for the transport to job work was generated after the
interception of the vehicle and goods.
b. In view of the finding above, it is seen that even the adjudicating authority has
conceded that the transaction was a job work transaction between M/s Oxino PEB
(the principal) and M/s Vera Display (the job worker).
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c. It is also noteworthy that the authenticity / veracity / bonafides of the above
documents /evidences have not been doubted / questioned by adjudicating authority.
d. The only reason for imposition of penalty seems to be that these documents were
not available at the time of detention.
e. We also find the order in original while conceding the fact that the above was a case
of job work wherein the documents were produced belatedly, goes on to state that :
M/s.Vera Display and Storage Products Pvt ltd Kanjikkode is not only a job worker but a
trader also. For that reason, the transaction from M/s Oxino PEB private Ltd to M/s, Vera
Display and Storage products must not be confirmed mere for a job work. The possibility of a
taxable supply also cannot be ruled out in this case, wherein the tax element might also be
involve. In such situations Tax invoice as provided under section 31 of the Act and Rule 46
shall be the document for transport. The act of M/s Oxino PEB Private Ltd however could not
be counted as a simple negligence in the instance of a case like this where the possibility of
tax suppression exist. (page 5 of OIO)
f. On a plain reading of the above it is clear that these statements run contrary to the
earlier finding that evidences in respect of job work (in the form of E way bill) had been
produced, though belatedly. We therefore find considerable force in the submission of
the appellant that:
“The Appellant has produced so many valuable documents to prove that the transaction is
genuine. None of the said documents were considered and discussed in the order. From the
order itself it is discernible that everything is pre-determined.”
g . It appears as if the adjudicating authority has made up its mind that the above is a
case of evasion (without any modicum of proof thereof ). Even as recorded in the
adjudication order, evidence for transfer of 21,800 Kg steel to M/s.Vera Display and
Storage Products , Kanjikkode for job work was furnished by the appellant on
17/07/2020 and E way Bill No.5911 89 8714 dated l7/7/2020,was produced well
before the passing of the adjudication order (as this fact is taken on record in the OIO
itself). However , the adjudication order paid no heed to the explanations / evidence
produced by the appellant and even after conceding that the transaction was in the
nature of job work, proceeded to impose penalty under section 129(1) on the basis of
unfounded fears, conjectures , apprehensions and speculations regarding sale of
goods by Oxino PEB to Vera Display and Storage Solutions (without even an iota of
evidence is support of the same)
6.2 From the discussions so far the following facts are clear:
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a. M/s Oxino PEB bought HR sheets from M/s Kummanchery steels and the goods
accompanied by valid e-way bill and tax invoice was being transported in vehicle
No.TN 30 Q 7788 which were seized at the premises of M/s Vera Display and Storage
Products at Kanjikkode at 4.l5 p,m on 17.07.2020 , on the ground that “the driver /
person in charge of the vehicle failed to produce documents for unloading the goods
at Vera Display and Storage Products Pvt Ltd Kanjikode”
b. The appellant has contended that they are engaged in the business of construction
of godowns and similar type buildings by using steel. Major portion of the work is
being done on the site. However, certain ready to fix parts are manufactured by out
sourcing the same. M/s. Vera Display & Storage products Pvt. Ltd, is doing this type
of work. They are having the machinery and technical knowhow to cater to their needs.
The consignment now detained is their goods and unloaded at the premises of M/s.
Vera Display & Storage Products Pvt, Ltd for doing job work. The material is
transported with commercial invoice and E Way Bill. The only mistake committed by
the consignor/supplier is that the place of shipment has been wrongly mentioned. This
is only a technical mistake committed by the billing staff of the consignor due to
inadvertent negligence.
c, The adjudicating authority has clearly recorded that evidences for transfer of 21,800
Kg steel to M/s.Vera Display and Storage Solutions Kanjikkode for job work was
furnished by the appellant on 17.07.2020 and E way Bill No.5911 89 8714 dated
l7/7/2020 to M/s, Vera Display and Storage Products Pvt Ltd , for Job work was seen
generated at 07.20 pm , whereas the time of interception of vehicle with goods was
4.15 pm which means the E way Bill for the transport to job work was generated after
the interception of the vehicle and goods.
d. From the above it is seen that even the OIO has accepted the contention of the
appellant that the nature of the transaction was job work. However it has pointed out
that the e-way bill was generated after the interception of the vehicle.
e. In our view, once a transaction is accepted as job work, the nature of the transaction
cannot be altered / denied merely because of discrepancy in the time of generation of
e-way bill .

7.1 We find that in the instant case penalty has been levied under section 129(1) of
the CGST /KGST Act 2017. The relevant section is reproduced under:
129. Detention, seizure and release of goods and conveyances in transit.
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(1) Notwithstanding anything contained in this Act, where any person transports any goods or
stores any goods while they are in transit in contravention of the provisions of this Act or the
rules made thereunder, all such goods and conveyance used as a means of transport for
carrying the said goods and documents relating to such goods and conveyance shall be liable
to detention or seizure and after detention or seizure, shall be released, ––
1[(a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods
and, in case of exempted goods, on payment of an amount equal to two per cent. of the value
of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes
forward for payment of such penalty;(emphasis supplied).
7.2 From the above, it is clear that any penalty under the said section is leviable only
in terms of the tax payable on such goods. We now proceed to examine what was the
tax payable on the impugned goods. We extract section 143(1) of the CGST ACt which
deals with job work procedure:
A registered person (hereafter in this section referred to as the “principal”) may under
intimation and subject to such conditions as may be prescribed, send any inputs or capital
goods, without payment of tax, to a job worker for job work and from there subsequently send
to another job worker and likewise, and shall……..,–
7.3 It is very clear that in the instant case, no tax is payable on the impugned goods
which were being sent for job work.
7.4 Once a determination has been made that tax on the goods is non est, it stands to
reason that penalty under section 129(1) of the CGST/KGST Act (which is to be
determined in terms of such tax payable), is not leviable.
7.5 In view of the above, we find that levy of penalty on the impugned goods (which
were indisputably transported on account of job work) is not sustainable.

8. Based on the above discussions / findings we answer the questions of law
formulated in para 1.1 and 1.2 in the negative and hold that:
a. No Penalty under section 129(1) of CGST Act can be proposed without specifying
the provisions of the Act or Rules that have been contravened.
b. No penalty under section 129(1) of CGST Act is leviable on goods that have been
sent for job work.

9. We find that in the instant case a technical mistake committed by the billing staff of
the consignor due to inadvertent negligence has resulted in the appellant being
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imposed with a huge penalty , without any consideration / analysis of his defence,
which was backed up with sufficient documentary evidence. In this connection we wish
to quote from the judgement of the honorable Kerala High court in the case of M/s. T.P.
Metals & Roofings Versus Assistant Tax Officer (INT), Malappuram, 2024 (10) TMI
1239 - KERALA HIGH COURT
Technically, there is a violation of the law by the petitioner and the reason stated for
transporting goods without revalidating the e-way bill may not be supported by any material.
However, the question remains as to whether this should automatically lead to the initiation
and conclusion of the proceedings under Section 129 of the CGST/SGST Acts resulting in the
imposition of a huge amount as tax and penalty. The learned Government Pleader may be right
in contending that there is justification for the initiation of proceedings under Section 129 of
the CGST/SGST Acts in the facts of this case.
However, once a plausible explanation is provided by the transporter/assessee, and it is found
that there is no attempt to evade any tax, the question remains as to whether the proceedings
must thereafter culminate in an order under Section 129 of the CGST/SGST Acts imposing the
maximum penalty in terms of the provisions contained in Section 129 of the CGST/SGST Acts.
While the initiation of the proceedings under Section 129 of the CGST/SGST Acts, in the facts
of this case, cannot be found to be without jurisdiction, the fact remains that once the
transporter/assessee had offered an explanation and had demonstrated that there was no
attempt to evade tax and in the absence of any finding of an attempt to evade tax, the officer
should have imposed a penalty as contemplated by the provisions of Section 122 (1) (xiv) of
the CGST/SGST Acts only, without imposing penalty as contemplated by the provisions of
Section 129 of the CGST/SGST Acts.---------------------------------------------------------------------
The scheme of Section 129 of the CGST/SGST Acts (both before and after the amendment w.e.f.
1.1.2022) appears to be that once the goods/conveyance are detained on a finding that the
goods are being transported ‘in contravention of the provisions of this Act or the rules made
thereunder’ they shall be released on conditions incorporated in Section 129 (1) (a), (b) or (c).
Thereafter the matter has to be adjudicated by issuing a notice and after hearing the parties.
If the contention of the State is to be accepted, there is no meaning in any adjudication as
contemplated as even if a minor discrepancy were to be eventually noticed, an amount
equivalent to 100% of the applicable tax +equal amount as penalty would be payable prior to
1.1.2022 and an amount equivalent to 200% of the tax payable would be payable as penalty
Page 12 of 13

after 1.1.2022. This obviously cannot be the intention of the legislature. If such interpretation
were to be placed on the provisions of Section 129 of the CGST/SGST Acts the provision would,
as already noticed, be arbitrary, whimsical and capricious and would thus be violative of
Article 14 of the Constitution of India.
We find that our findings are in keeping with the spirit of the above judgement of the
honourable jurisdictional High Court.
10. In view of the discussions as above, we find that:
a. the entire proceedings in the instant case are vitiated for breach of the
principles of natural justice
b. even on merits the demand under section 129(1) of the CGST / SGST Act is
not sustainable.

11. Based on the above findings, the following order is passed:
The appeal is allowed and the order in appeal is set aside with consequential relief.

[Order pronounced in open court on 30/10/2026]

Rayaprol
Subramanya
Viswanatha
Digitally signed by Rayaprol
Subramanya Viswanatha
Date: 2026.10.30 16:53:02
+05'30'

Subramanya Rayaprol
Vice President



Ramamoorthi Sriram
Digitally signed by Ramamoorthi
Sriram
Date: 2026.10.30 17:35:04 +05'30'
Ramamoorthi Sriram
Member (Technical)
Dated: 30/10/2026.


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