Case Title: M/s D and D Construction and Developers Company
Court: High Court of Judicature at Allahabad
Petition No.: Writ Tax No. 1384 of 2022 & Writ Tax No. 1383 of 2022
Relevant Section: Section 129 of CGST Act
Category of Dispute: Detention and Penalty on Stock Transfer (E-way bill non-compliance)
Date of Judgment: 08 April 2025
Relevant CGST Provisions: Sections 68, 122, 129, 130 of CGST Act, Rule 138
Facts of the Case [Para 3–5]
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The petitioner, a registered construction company (Rajasthan), transferred an old compactor machine to its worksite in Auraiya, Uttar Pradesh, for internal use in the Bundelkhand Expressway project [Para 4].
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The vehicle was intercepted on 16.03.2020 for allegedly transporting goods without invoice and e-way bill [Para 4].
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The petitioner produced the delivery challan and e-way bill after issuance of notice; however, the authorities passed a seizure and penalty order under Section 129 [Para 4–5].
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The petitioner argued that it was merely a stock transfer and not a sale; hence, no tax was applicable [Para 5].
Questions in Consideration [Para 3, 9–10]
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Whether movement of goods (machinery) for internal use between units, without invoice/e-way bill at interception time but later produced, amounts to tax evasion?
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Whether proceedings under Section 129 of CGST Act were sustainable without establishing intent to evade tax?
Observation of Court [Para 9–13]
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Goods were moved for own use between head office and site; documents were later produced, and no sale was involved [Para 9].
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No provision mandates tax liability for such intra-entity stock transfers without sale [Para 10].
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Absence of intent to evade tax renders invocation of Section 129 improper [Para 10].
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Cited decisions like Shyam Sel & Power Ltd, Satyam Shivam Papers Pvt. Ltd., and Vacmet India Ltd. supported that penalty proceedings require clear evidence of tax evasion intent [Para 11–13].
Judgement of the Court [Para 14–16]
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The Court held that the impugned seizure and penalty orders were unsustainable and quashed them [Para 14].
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Directed refund of any penalty deposited within one month, failing which 4% interest per annum would apply [Para 16].
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Both writ petitions were allowed [Para 15].
Between Fine Lines
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Movement of goods for internal use without sale does not attract GST.
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Mere absence of e-way bill at the interception moment is not sufficient for penalty.
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Section 129 proceedings require clear proof of tax evasion intent.
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Courts favour a purposive reading of CGST provisions over strict procedural defaults.
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Refund of wrongly collected penalty is a legal right if no tax evasion is established.
Summary of Referred Cases
| Name of Case | Citation | Summary | Verdict |
|---|---|---|---|
| Shyam Sel & Power Ltd | (2023) 11 Centax 99 | Held: Intent to evade tax is necessary under Section 129; otherwise minor breach is curable. | Detention unsustainable |
| Satyam Shivam Papers Pvt. Ltd | Not cited fully | SC ruled that delays not attributable to intent cannot lead to tax evasion findings. | Proceedings quashed |
| Vacmet India Ltd | Writ Tax No. 687 of 2019 | Intra-state stock transfer is not taxable; intent to evade tax is mandatory under Sec. 129. | Orders quashed |
| Same Deutzfahr India P Ltd. | WP No. 13392/2020 (Telangana HC) | Intra-unit stock transfer without sale cannot be taxed; transport cannot be deemed illegal. | Tax and penalty held illegal |
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