Decided 30 September 2026. The Bengaluru Bench of GSTAT has quashed detention, tax and penalty under section 129 imposed because Part-B of an e-way bill was blank, where the vehicle had already reached the consignee's gate. The Tribunal held the goods were no longer 'in transit', there was no intent to evade tax on a stock transfer, and the adjudication order was back-dated after the hearing.
Case at a glance
| Case | Vardhman Yarns and Threads Limited v. Commissioner of Commercial Taxes, Karnataka |
| Forum | GSTAT, Bengaluru Bench, Division Bench Court II |
| Appeal No. | APL/221/BUR/2026 |
| Date of order | 30 September 2026 |
| Demand | Tax Rs 1,80,824 and equal penalty (later re-quantified) |
| Result | Appeal allowed; tax and penalty to be refunded with interest |
Facts of the case
On 04.05.2018, the appellant's unit at Perundurai, Tamil Nadu sent sewing threads to its branch at Yeshwantpur, Bengaluru with tax invoices and Part-A of the e-way bill. Part-B (vehicle number) was left blank, weeks after the e-way bill system began.
The vehicle reached the godown gate at 6 AM on 05.05.2018 and was inspected at 6:30 AM while waiting to unload. Part-B was updated the same day. The appellant paid under protest for release. A hearing was held on 06.08.2018, but the order it received was dated 07.05.2018.
Issue before the Tribunal
Can goods be detained and penalised under section 129 for a blank Part-B when the vehicle has reached the consignee's premises and the defect is promptly cured?
What the Tribunal held
- Section 129 applies to goods 'in transit'. The vehicle had completed its inter-state journey and was at the appellant's gate, as the driver's statement showed (Hemanth Motors, Karnataka High Court).
- Following the Supreme Court in Satyam Shivam Papers, penalty under section 129 needs intent to evade tax. The blank Part-B was a clerical slip on a fully tax-paid stock transfer; section 126 bars penalty for minor, easily rectifiable breaches (BVM Trans Solutions).
- Holding a hearing on 06.08.2018 but issuing an order dated 07.05.2018 made the hearing an empty formality and breached natural justice.
- The order was set aside and the tax and penalty paid under protest must be refunded with interest within four weeks.
Practical takeaways for taxpayers
- Check whether goods were still 'in transit' at interception; detention at the destination can be challenged.
- Update Part-B immediately when a lapse is pointed out and preserve evidence of the cure.
- Note the dates of hearing and order; a back-dated order is a strong ground of appeal.
Frequently asked questions
Is penalty leviable under section 129 if Part-B was not filled?
Not where there is no intent to evade, the documents are valid and the defect is cured, according to this ruling and Satyam Shivam Papers.
Can goods be detained at the consignee's gate?
GSTAT Bengaluru held that goods that have reached their destination are not 'in transit' under section 129.
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This summary is based on the order of the GST Appellate Tribunal, Bengaluru Bench (Division Bench Court II) in Appeal No. APL/221/BUR/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.