Scrap Firm Keeps ₹2.12 Lakh Penalty Set Aside as GST Tribunal Finds Valid E-Way Bill and No Goods Discrepancy

In brief

The question

1. Whether the penalty under Section 129(3) was sustainable when the goods were accompanied by valid tax invoices and an e-way bill and physical verification disclosed no discrepancy

The court held

The Tribunal dismissed the Department’s appeal and confirmed the order under appeal, which had set aside the ₹2,12,400 penalty.

It also directed

The penalty was therefore not determined as payable

01Facts

The Department appealed an order setting aside a penalty of ₹2,12,400 imposed on M/s Pitambara Enterprises under Section 129(3) of the CGST/UPGST Act, 2017.

The penalty followed an allegation that iron scrap had been transported from an undeclared warehouse.

The goods were accompanied by tax invoices and an e-way bill; physical verification found no discrepancy in their description, quantity, weight, or value.

The Tribunal recorded that the Department’s allegation was not supported by independent evidence and relied primarily on the driver’s statement.

The Tribunal’s order identifies Shyam Vir Singh, Assistant Commissioner, SGST, as appellant and Pitambara Enterprises as respondent.

02Issues

i.1. Whether the penalty under Section 129(3) was sustainable when the goods were accompanied by valid tax invoices and an e-way bill and physical verification disclosed no discrepancy

ii.2. Whether the allegation of transportation from an undeclared warehouse was established by sufficient evidence, where the Department relied primarily on the driver’s statement

03Law Applied

The Tribunal considered Section 129(3) of the CGST/UPGST Act, 2017, under which a penalty may be imposed in connection with goods transported in contravention of the Act or rules.

The order’s stated reasoning requires the Department’s allegation supporting the penalty to be substantiated by evidence; the Tribunal identified no cited precedent or further statutory rule

Provisions in the judgment · 1 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 129

04Reasoning

The Tribunal found that the goods were supported by tax invoices and an e-way bill, and that physical verification disclosed no mismatch in description, quantity, weight, or value.

Against that evidence, the Department did not independently substantiate the claim that the goods came from an undeclared warehouse; its reliance primarily on the driver’s statement was insufficient to support the penalty