M/S.Century Apparels Private Limited vs. Deputy State Tax Officer (Intelligence)
Original PDF →Facts
The petitioner, M/s. Century Apparels Private Ltd., a garment manufacturer, transported goods from Tirupur to Tuticorin for export. The vehicle was detained at Valayankulam Toll Plaza. The e-way bill indicated the origin as Chennai, not Tirupur, which was the actual place of dispatch. The respondent, Deputy State Tax Officer (Intelligence), levied a penalty of 200% of the tax value under Section 129(1)(a) of the CGST Act. The petitioner paid the penalty under protest and subsequently filed a writ petition challenging the penalty order. The petitioner contended that the discrepancy in the e-way bill was a typographical error. The respondent argued that the proceedings concluded upon payment of penalty, and the petitioner should have approached the appellate authority.
Held
The Court held that the impugned order could not be sustained on multiple grounds. Firstly, the discrepancy in the e-way bill, stating Chennai instead of Tirupur as the place of dispatch, was a minor breach, likely a typographical error, committed without fraudulent intent or gross negligence. This falls under the purview of Section 126 of the Act, which disallows penalties for minor breaches and easily rectifiable documentation mistakes. The respondent failed to demonstrate any benefit the petitioner could have gained from this error. Secondly, the Court found a serious breach of the principles of natural justice as required by Section 129(4). The impugned order in Form GST MOV-09 left the column for reasons for not accepting objections blank, indicating a failure to consider the petitioner's defense. Furthermore, the Court rejected the respondent's contention that payment of penalty under protest concluded the proceedings, citing the Supreme Court decision in ASP Traders v. State of Uttar Pradesh, which held that such payment indicates an intent to contest and necessitates a speaking order for appeal. The Court also noted the absence of any allegation of tax evasion or mens rea in the show cause notice or the impugned order. Consequently, the impugned order was quashed, and the amount paid by the petitioner was ordered to be refunded forthwith without interest.
Key Issues
1. Whether the discrepancy in the e-way bill, stating Chennai as the origin instead of Tirupur, constitutes a contravention of the Act warranting penalty under Section 129(1) of the CGST Act, considering the petitioner's submission of a typographical error and the absence of fraudulent intent or gross negligence? 2. Whether the payment of penalty under protest, as per Section 129(5) of the TNGST Act, 2017, concludes all proceedings, precluding the petitioner from challenging the order? 3. Whether the impugned order suffers from a violation of principles of natural justice due to the non-consideration of the petitioner's objections, as required by Section 129(4) of the CGST Act? Petitioner's arguments: The discrepancy was a minor, rectifiable typographical error without fraudulent intent or gross negligence, falling under Section 126 of the Act and Circular No. 10/2019. The payment under protest did not conclude proceedings, citing ASP Traders v. State of Uttar Pradesh. The respondent failed to provide reasons for rejecting objections, violating Section 129(4). Respondent's arguments: Proceedings concluded due to payment of penalty under Section 129(5), relying on Thiruchy Royal Steels v. Deputy State Tax Officer.
Sections Cited
Section 129, Section 126, Section 129(1), Section 129(5), Section 129(4), Section 129(1)(a)
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Before: AND
Heard both sides. 2.The writ petitioner is a company engaged in manufacturing of garments. The head office is located in Chennai and the manufacturing unit is in Tirupur. On 01.09.2024, the petition- mentioned goods were moved from Tirupur to Tuticorin for export to Ireland. The vehicle transporting the goods was detained at Valayankulam Toll Plaza and inspected. The driver of the vehicle informed the Inspector-official that the goods are being transported from Tirupur. However in the e-way bill, it was mentioned that the goods were being transported from Chennai. On that ground, penalty to the tune of 200% of the tax value has been levied under Section 129(1) (a) of the CGST Act. The writ petitioner paid the same under protest. Thereafter, the goods were released. Challenging the penalty order, this writ petition has been filed. 3.The learned counsel appearing for the writ petitioner reiterated all the contentions set out in the affidavit filed in support of the writ petition and called upon this Court to grant relief as prayed for. 2/11 https://www.mhc.tn.gov.in/judis
3 W.P.(MD)NO.3748 OF 2025 4.Per contra, the learned Additional Government Pleader learned single Judge was confirmed by the Hon'ble Division Bench in reason:- “Goods moved to Tirupur to Tuticorin but the consignor had raised e-way bill for Chennai to Tuticorin. Hence, it is found that goods moved 3/11 https://www.mhc.tn.gov.in/judis
4 W.P.(MD)NO.3748 OF 2025 without e-way bill. The consignor mentioned the DC number, instead of e-invoice Number in e-way bill. Hence, penalty levied under Section 129(1)(a) of TNGST Act, 2017.” Section 129(1) of TNGST Act 2017 reads as follows: Section 129. Detention, seizure and release of goods and conveyances in transit.- (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,- [(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; Section 129(1) provides for levy of penalty if goods have been transported in violation of the statutory provisions. 4/11 https://www.mhc.tn.gov.in/judis
5 W.P.(MD)NO.3748 OF 2025 7.It is not in dispute that the consignment was accompanied by an export invoice, e-invoice and an e-way bill. The respondents had proceeded on the premise that the goods have been transported without an e-way bill. This finding is factually incorrect. The goods were very much accompanied by an e-way bill. The only discrepancy was that the place of despatch was mentioned as Chennai instead of Tirupur. The explanation given by the writ petitioner is that it is a typographical error committed by the staff. When such a defence has been specifically taken by the registered person, it was incumbent on the part of the detention officer to deal with the said defence. The detention officer could not have proceeded on the premise that there was no e-way bill accompanying the goods in transit. 8.Section 126 of the Act reads as follows : “Section 126. General disciplines related to penalty.- (1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence. Explanation.-For the purpose of this sub-section,- 5/11 https://www.mhc.tn.gov.in/judis
6 W.P.(MD)NO.3748 OF 2025 (a) a breach shall be considered a "minor breach" if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record.” De minimis non curat lex is a well known legal maxim. Law does not concern itself with trifles. This part of Section 126 embodies the above maxim. It is quite possible that typographical errors might creep in during documentation process. If no benefit will accrue to the assessee by such errors, it is only just and proper that such errors are allowed to be rectified and the assessee is spared of the consequences. This has also been captured in Circular No.10/2019 dated 31.05.2019 issued by the Commissioner of Commercial Taxes, Chennai in the following terms : “9.Circumstances where no penalty shall be levied by the roving squad : ....... ii. Where a mistake or omission in documentation is easily rectifiable and has been committed without fraudulent intent or gross negligence or is not backed up with any sort of malicious intent to evade taxes.” 6/11 https://www.mhc.tn.gov.in/judis
7 W.P.(MD)NO.3748 OF 2025 To a pointed question by this court, the respondent has not been able to demonstrate the possible benefit which the registered person could have gained by mentioning the place as Chennai instead of Tiruppur. On these twin grounds, namely, non-consideration of the petitioner's defence and the minor nature of the breach, the impugned order is quashed. 9.Section 129(5) of the Act reads as follows:- “On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.” The above Section cannot be pressed into service. The payment of penalty was under protest. It was without prejudice to the petitioner's defence. The learned counsel appearing for the petitioner draws my attention to the decision of the Hon'ble Supreme Court reported in (2025) 144 GSTR 693 (ASP Traders Vs. State of Uttar Pradesh & Others). In the aforesaid decision, it was held that when payment is made under protest, it indicates that the assessee intended to contest the matter and that therefore, the proper officer was bound to pass a 7/11 https://www.mhc.tn.gov.in/judis
8 W.P.(MD)NO.3748 OF 2025 speaking order under section 129(3), to enable the appellant to exercise of their statutory right of appeal. This judgment of the Hon'ble Supreme Court answers the contention of the respondent that payment of the penalty by itself would lead to termination of the proceedings. It is not so. Even after such payment under protest, the order can be challenged. 10.Section 129(4) reads that no order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. In the present case, GST MOV-07 was issued on 01.09.2024 directing the petitioner to show cause within 7 days why penalty should not be imposed on them. The impugned order of demand of penalty in Form GST MOV-09 was also passed contemporaneously i.e., on the same day. In the impugned order, the eighth column reads as follows: “The objections filed by him were perused and found acceptable/not acceptable for the following reasons:” The said column has been left blank by the respondent. This is a serious breach of the principles of natural justice provided for in Section 129(4) of the Act. The impugned order is liable to be quashed also for non- adherence to the procedure laid down in Section 129 of the Act. 8/11 https://www.mhc.tn.gov.in/judis
9 W.P.(MD)NO.3748 OF 2025 11.Section 129(1) can be pressed into service only when any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act. It is not the case of the respondent that the petitioner has evaded or attempted to evade tax. No mens rea has been alleged either in the show cause notice or the impugned order. While being so, mens rea has been alleged in the counter affidavit for the first time. It is well settled that the order of the authority must speak for itself and while it can be given a different spin in the counter affidavit, additional grounds cannot be added. 12.Looked at from any angle, the impugned order cannot be sustained and it is quashed. The amount paid by the writ petitioner shall be refunded forthwith and without any delay but without any interest. 13.This writ petition is allowed accordingly. No costs. Consequently, connected miscellaneous petition is closed.
2025 NCC : Yes / No Index : Yes / No Internet : Yes/ No PMU/SKM 9/11 https://www.mhc.tn.gov.in/judis
10 W.P.(MD)NO.3748 OF 2025 To: The Deputy State Tax Officer(Intelligence), Roving Squad II, Madurai. 10/11 https://www.mhc.tn.gov.in/judis
11 W.P.(MD)NO.3748 OF 2025 G.R.SWAMINATHAN,J. PMU/SKM W.P.(MD)No.3748 of 2025 22.10.2025 11/11 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.