Case Title: Bharti Airtel Ltd. v. State of U.P.
Court: High Court of Allahabad
Petition Number: Writ – C No. 6620 of 2021
Category of Dispute: Detention of Goods in Transit / Wrongful Penalty under Section 129
Date of Judgment: 19 October 2022
Relevant Sections: Section 129, 73, 74, 122 of CGST Act, Rule 138 of CGST Rules
Takeaway: Penalty Without Proper Proceedings is No Penalty at All
Facts of the Case
[Para 5–9]
- Bharti Airtel Ltd. transported goods from its Lucknow warehouse to Gurgaon. E-way bill Part-A was generated, but Part-B was inadvertently omitted.
- The vehicle was intercepted on 25-09-2018 at 4:43 AM; Part-B was generated later the same day at 7:34 AM before seizure.
- Authorities detained goods and passed order under Section 129 of CGST Act.
- Despite tax payment, a penalty of ₹62.74 lakhs was imposed.
- Goods were released after furnishing a bank guarantee of ₹1.25 crore.
- A show-cause notice was issued on 29-09-2018 under Section 129(3) and Section 20.
Question(s) in Consideration
[Para 12–13, 27–28]
- Whether authorities were justified in determining tax and penalty solely under Section 129 without invoking proper adjudication under Sections 73, 74, or 122 of the CGST Act?
- Can a penalty be imposed under Section 129 where the owner has not voluntarily opted to pay the penalty?
Observations of the Court
[Para 24–28]
- Section 129 is a mechanism for detention and conditional release, not for adjudication of tax dues or penalties.
- Proper adjudication of tax and penalties must be done under Sections 73, 74, and 122.
- Department proceeded only under Section 129 without invoking due adjudicatory sections.
- No proceedings were initiated under Section 73/74/122 for determination of tax or penalty.
- Section 129 does not empower determination of dues without opportunity of proper hearing and adjudication.
Judgment of the Court
[Para 29–30]
- Both the original order dated 17-10-2018 and appellate order dated 31-10-2020 were quashed.
- Department’s action to determine tax and penalty under Section 129 alone was held unsustainable.
- Ordered refund of amount deposited by petitioner within 2 months.
- Writ petition allowed.
Between Fine Lines
- Mere non-filing of Part-B of the e-way bill does not justify penalty without adjudication.
- Section 129 provides an alternative remedy, not a power to adjudicate tax dues.
- Penalties must follow the proper route of Sections 73/74/122 after due process.
- This judgment clarifies that mechanical invocation of Section 129 is not legally tenable.
- Taxpayers are entitled to adjudication before penalty, even if goods are detained in transit.
Summary of Referred Cases
| Name of Case | Citation | Summary | Verdict |
| Modern Traders v. State of U.P. | Writ Tax No. 763 of 2018 | Part-B omission shouldn’t attract harsh penalty without tax evasion | Relief granted |
| Skipper Limited v. Union of India | Writ Tax No. 344 of 2018 | Procedural lapses in e-way bill need proportional penalty, not excessive | Petitioner’s case upheld |
| Metenere Ltd. v. Union of India | Writ Tax No. 360 of 2020 | Emphasized on intent and tax compliance rather than formality for penalties | Penalty held unjustified |
| VSL Alloys (India) Pvt. Ltd. v. State of U.P. | 2018 (67) NTN-DX 1 | Relied by department for strict view on e-way bill non-compliance | Relied upon by department |
| Gati Kintetsu Express Ltd. v. State of M.P. | (2018) 56 GSTR 114 | Penalty upheld due to procedural lapse in transport documents | Relied upon by department |
| Ideal Movers Pvt. Ltd. v. State Tax Officer | W.P. No. 1431 of 2020 (Madras) | Upholds authority’s right to detain for e-way bill non-compliance | Relied upon by department |