M/S Jakson Limited vs. The Union Of INDIA
Original PDF →Facts
The petitioner, M/s Jakson Limited, engaged in manufacturing heavy industrial machinery, was transporting a Generating Set from Mumbai to Nepal via Bihar. The consignment was accompanied by valid export documents and an E-Way Bill. During transit, the vehicle was intercepted on 05.06.2026 at Jalalpur Checkpost. It was found that the E-Way Bill had expired on 04.06.2026, approximately 21 hours and 30 minutes before the interception. The Proper Officer imposed a penalty of Rs. 24,15,600/-. The petitioner's appeal before the Additional Commissioner (Appeal) was dismissed on 07.07.2026. The petitioner filed a writ application challenging these orders, as the GST Tribunal, though constituted, was not yet functional, and the goods and vehicle were susceptible to depreciation.
Held
The Court acknowledged that the appellate order could be challenged before the GST Tribunal, which had been constituted and was expected to start functioning. However, it noted that the goods and vehicle were perishable and susceptible to substantial damage due to adverse weather conditions if not released promptly. The petitioner expressed willingness to furnish a bank guarantee for the remaining penalty amount to secure the release. Considering these factors, the Court disposed of the writ application. The petitioner was granted liberty to file an appeal before the Tribunal by 31.07.2026. The petitioner was directed to furnish a bank guarantee of Rs. 21,74,100/- before the Appropriate Authority for the release of the goods and vehicle forthwith, preferably within two days. This bank guarantee was to remain valid as long as the appeal was pending before the Tribunal and was subject to the Tribunal's final outcome. The Court did not decide on the merits of the penalty itself, leaving it for the Tribunal.
Key Issues
1. Whether the penalty imposed under Section 129 of the CGST Act is sustainable when the E-Way Bill had expired due to unforeseen circumstances during transit, and the goods were in the course of export/transit against valid export documents? The petitioner argued that all requisite export documents were in order, and the delay in transit was due to the driver falling ill, leading to the E-Way Bill's expiry. They contended that the goods were in transit for export and should not be subject to penalty under Section 129. They proposed furnishing a bank guarantee for the balance penalty amount to secure the release of goods and the vehicle, given the non-functionality of the GST Tribunal. The State argued that the petitioner should be relegated to the remedy of filing an appeal before the GST Tribunal, which was constituted and likely to become functional soon. However, they conceded that if the petitioner furnished a bank guarantee for the remaining penalty amount, the goods and vehicle could be released, subject to the Tribunal's final decision.
Sections Cited
Section 129
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Cause title — parties, addresses and appearances
ORAL ORDER (Per: HONOURABLE MR. JUSTICE ANIL KUMAR SINHA) 2 20-07-2026
The petitioner has filed the present writ application for quashing the order, dated 07.07.2026, passed in Appeal Case No. GG/GST-14/2026-27 whereby the Additional Commissioner (Appeal), Saran Division, Chhapra, has rejected
the appeal filed against the order, dated 18.06.2026, passed by 2/6 the Proper Officer/Adjudicating Authority. The petitioner has further prayed for quashing the order in Form GST MOV-09, dated 18.06.2026, passed by respondent no. 5, the Deputy Commissioner of State Tax, Gopalganj Circle, Gopalganj, whereby a penalty of Rs. 24,15,600/- has been imposed.
The background facts of the case, in brief, are that the petitioner's company, engaged in the manufacture of heavy industrial machinery, had obtained an order from Nepal for transportation of Generating Set (SPL 1010 KVA) from Mumbai, Maharashtra, to Nepal via Bihar in the course of export/transit against valid export documents including the tax invoice, shipping bill, Nepal customs documents/LUT, certificate of origin, letter of credit, etc. The export documents of the said consignment was accompanied by a valid tax invoice under a valid E-Way Bill, bearing No. 262208662013. The goods were being transported through a vehicle, bearing Registration No. MH46-AR-5814, and all the requisite documents, prescribed under the provisions of the GST Act, were available with the driver of the vehicle.
Mr. Anurag Saurav, learned counsel for the petitioner, submits that the goods were in transit from Mumbai to Nepal via Bihar and the vehicle had to cover a distance of 3/6 about 1,800 km. During transit, the vehicle was intercepted at Jalalpur Checkpost on 05.06.2026, where the Proper Officer attached to the Office of the Joint Commissioner of State Tax, Gopalganj Circle, Gopalganj, acting under the powers conferred by the GST Act, intercepted the petitioner's vehicle during a physical transit verification drive. The driver produced the e- way bill during verification and it was found that the statutory validity of the e-way bill had expired on 04.06.2026, whereas, the physical movement of the taxable goods continued on 05.06.2026, i.e., about 21 hours and 30 minutes after the expiry of the documents. The statement of driver was recorded in the Form of GST MOV 01. 4. Learned counsel further submits that the Proper Officer imposed a penalty of Rs. 24,15,600/- after rejecting the reasons given by the driver that he fell ill during the transit period and the e-way bill could not be validated. The Proper Officer passed an order, dated 18.06.2026. The petitioner, thereafter, moved in appeal before the Appellate Authority, and the appeal was also dismissed by the Appellate Authority on 07.07.2026. At the time of filing the appeal, the petitioner deposited 10% of the assessed amount, which came to Rs. 2,41,500/-. He next submits that the order, dated 07.07.2026, 4/6 passed by the Appellate Authority provides that an appeal against the said order may be filed before the GST Tribunal within a period of three months from the date of communication of this order.
Although, the GST Tribunal has been constituted, but it is still not functional and functioning of the Tribunal may take time. The goods and the vehicle are kept in open space and if not released immediately, due to adverse weather conditions and improper upkeep, the value of the goods as well as the vehicle is likely to depreciate and may become worthless after sometime.
The petitioner, therefore, submits that the balance amount of penalty, after deducting 10% of the amount already deposited by the petitioner’s company before the Appellate Authority, shall be deposited by way of a bank guarantee in favour of the appropriate authority under Section 129(1)(c) of the GST Act, subject to the final outcome of the appeal to be filed by the petitioner before the Tribunal.
On the other hand, learned counsel for the State submits that the petitioner may be relegated to the remedy of filing an appeal before the Tribunal inasmuch as the Tribunal has already been constituted and is likely to become functional 5/6 within a few months. However, if the petitioner furnishes a bank guarantee before the Appropriate Authority for the remaining amount of penalty, the goods as well as the vehicle shall be released in favour of the petitioner, subject to the final outcome of the appeal before the Tribunal.
We have heard learned counsel for the parties and have gone through the materials available on record.
The appellate order, dated 07.07.2026, can be challenged before the Tribunal and the Tribunal has already been constituted and is likely to start functioning after a while. However, the vehicle, in question, and the goods therein are perishable in nature and substantial damage would be caused to the vehicle and goods during rainy season, if the same are not released.
The petitioner is ready to furnish a bank guarantee of the remaining penalty amount for the release of the goods and the vehicle. Accordingly, this writ application is disposed with liberty to the petitioner to file an appeal before the Tribunal on or before 31.07.2026. 11. The petitioner shall furnish a bank guarantee of Rs. 21,74,100/- before the Appropriate Authority. Upon furnishing such bank guarantee, the goods as well as the vehicle 6/6 in question shall be released by the Appropriate Authority forthwith, preferably within two days.
It is made clear that the petitioner shall keep the bank guarantee alive so long as the appeal remains pending before the Tribunal. In case of default on part of petitioner, the respondents-authorities shall be at liberty to take appropriate steps against the petitioner.
Bank guarantee furnished by the petitioner shall be subject to final outcome/order passed by the Tribunal.
With the aforesaid observations and directions, this writ application is, accordingly, disposed.
ashwani/- (Anil Kumar Sinha, J) ( Vikash Kumar, J) U
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.