No Section 129 Penalty Without Specified Contravention or on Job-Work Goods: GSTAT Ernakulam

The GST Appellate Tribunal’s Ernakulam Bench set aside tax and penalty on steel unloaded at a job worker’s premises, finding the notice cited no provision breached and no tax was payable on job-work movement.

The GST Appellate Tribunal, Ernakulam, has held that no penalty under Section 129(1) of the CGST Act, 2017 can be proposed without specifying the provisions of the Act or Rules contravened, and that no such penalty is leviable on goods sent for job work. The Bench of Subramanya Rayaprol, Vice President, and Ramamoorthi Sriram, Member (Technical), who wrote the order, set aside the tax and penalty [Oxino Peb Pvt Ltd v. Commissioner of SGST, Keralam, 2026-juristway.com-3224-GSTAT(Ernakulam)-GST].

On 17 Jul 2020, an intelligence squad intercepted a vehicle carrying HR sheets invoiced by Kummenchery Steels to the appellant while the goods were being unloaded at the premises of Vera Display and Storage Products Pvt. Ltd., Kanjikkode. The invoice and e-way bill named the appellant as consignee, and no document covered the unloading. Tax and penalty of ₹77,323 each under CGST and SGST were confirmed on 18 Aug 2020, and the first appeal failed.

The appellant said the goods had been sent for job work and that an e-way bill to the job worker was generated within about three hours of interception. The Department argued that Section 129 imposes strict liability and that the job worker was also a trader, creating a risk of unrecorded supply.

The Bench found that the show cause notice (SCN) cited no provision of the Act or Rules as contravened. Relying on M/s Armour Security (India) Ltd v Commissioner, CGST, Delhi East Commissionerate (2025), it held contravention to be a sine qua non for invoking Section 129(1) and the proceedings void ab initio. The adjudication order’s later reliance on Sections 31 and 143 and Rules 45, 46, 55 and 138, none of which was put to the appellant in the SCN, breached natural justice.

On merits, the Bench noted that the adjudicating authority had itself recorded the transfer as job work. Since Section 143(1) allows inputs to be sent to a job worker without payment of tax, and the penalty under Section 129(1)(a) is computed on the tax payable, it held that no penalty could arise. It also cited the Kerala High Court’s ruling in M/s. T.P. Metals & Roofings Versus Assistant Tax Officer (INT), Malappuram (2024), and allowed the appeal with consequential relief.

2026-juristway.com-3224-GSTAT(Ernakulam)-GST