Incomplete Challan for Job Work under GST Rule 45 Violates Rule 55: Allahabad HC Upholds Seizure and Penalty u/s 129 [Read Order]

The Allahabad High Court upheld the seizure and penalty under Section 129 of the Goods and Services Tax ( GST ) Act citing that the incomplete challan for job workers under Rule 45 violates Rule 55 of the Central Goods and Services Tax ( CGST ) Rules, 2017. It was observed that in such incompleteness, the action taken by the department is not arbitrary.

The Court dismissed the writ petition filed by M/s Famus India, observing that the challan accompanying the consignment was incomplete and did not meet the prescribed requirements under the Rules.

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The petitioner had challenged the order dated 8.9.2020 passed by the Additional Commissioner (Appeal), Meerut, which confirmed the tax and penalty imposed on the petitioner after the goods were intercepted and found to be en route to a job worker, instead of the petitioner’s declared business premises. The petitioner contended that all necessary documents were present and that the movement of goods to the job worker did not constitute a contravention.

However, the State, represented by the Additional Chief Standing Counsel (ACSC), argued that Rule 45 and Rule 55 of the GST Rules clearly require a duly filled delivery challan when goods are sent for job work. Upon perusal of the challan provided by the petitioner, the Court noted that multiple mandatory fields required under Rule 55 were missing, rendering the challan non-compliant.

The High Court observed that mere presence of a challan is not sufficient, the document must conform to the prescribed format, including key details such as the GSTIN, description of goods, quantity, and tax details, among others. Incomplete or improperly issued challans, the Court observed, constitute a breach of GST rules and justify detention and penal action under Section 129.

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Justice Piyush Agrawal observed that “Learned ACSC has produced a photocopy of challan issued by the petitioner (which is not disputed by the counsel for the petitioner) and on perusal of the same, it shows that various descriptions as required under Rule 55 of the Rules are not mentioned on it and the same was incomplete. Once various requirements as contemplated under the Rules were not complied with, which demonstrates the contravention of Rules 55, therefore, the proceeding under Section 129 of the GST Act cannot be said to be arbitrary.”

Citing the lack of merit in the petition and the non-compliance with procedural rules, the Court refused to interfere with the orders of the tax authorities and dismissed the writ petition. Accordingly, the penalty under Section 129 of GST law was upheld.

To Read the full text of the Order CLICK HERE

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