The Tribunal held that mens rea is a sine qua non for invoking confiscatory penalties under Section 129, and that procedural documentation failures during bona fide logistical disruptions cannot be equated with intent to evade tax.

The Goods and Services Tax Appellate Tribunal, Bengaluru Bench, has set aside a penalty of ₹20,13,640 levied under Section 129 of the CGST Act on imported electronic goods that were intercepted during a return journey without a fresh e-way bill, substituting it with a nominal general penalty of ₹25,000 under Section 125 [Valuecart Private Limited v. Commercial Tax Officer (Enf), South Zone, Bangalore].

The appellant had imported high-value electronic goods from South Korea, discharged full Customs Duty and IGST at the port of entry, and dispatched the goods to Amazon's delivery centre under a valid e-way bill and import documents. Due to severe traffic congestion, the vehicle missed its allotted delivery time slot and Amazon refused entry outside the scheduled window. The goods were consequently hauled back to the customs agent's bonded warehouse for safe temporary storage, but in this hurried, unexecuted return loop, the logistics team inadvertently omitted to generate a return e-way bill or delivery challan. The goods were intercepted and a 200 percent penalty was levied under Section 129.

The Tribunal, comprising Sudha Koka (Technical Member) and Srikanth Venkatraman (Judicial Member), undertook a detailed analysis of binding judicial precedents. Relying on the Supreme Court's ruling in Satyam Shivam Papers Pvt. Ltd. [2022 (57) GSTL 97 (SC)], the Tribunal held that intent to evade tax is a mandatory prerequisite for invoking Section 129, especially where transactions are fully accounted for and taxes fully paid. The lower appellate authority's finding that Section 129 operates as a strict liability provision was categorically rejected. The Tribunal also applied the jurisdictional precedent of the Karnataka High Court in Kristna Engineering Works v. State of Karnataka [(2024) 19 Centax 502 (Kar.)], which held that minor procedural paperwork lapses unaccompanied by tax evasion cannot attract confiscatory penalties and should instead attract only a nominal general penalty under Section 125.

The Tribunal directed refund of the 25 percent cash deposit made via DRC-03 and release of the bank guarantee, after adjusting the nominal penalty. Compliance was directed to be completed within eight weeks. The decision reinforces that the severity of a Section 129 penalty must be proportionate to the gravity of the default, and that where goods are fully duty-paid, backed by authentic import documentation, and the transit interruption arises from genuine logistical difficulties, a procedural omission cannot be weaponised into a revenue demand.

2026-juristway.com-2824-GSTAT(Bengaluru)-GST  |  GSTAT Bengaluru  |  APL/174/BUR/2026  |  30.09.2026