Mere Change in Route Not Enough to Invoke GST Sec.129: Calcutta HC [Read Order]
Section 129 proceedings cannot be invoked in the absence of intent to evade tax, especially when documentation is substantially in order and goods are accompanied by a valid e-way bill
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The Calcutta High Court has held that a mere change in the transportation route or interception of a vehicle at a location not aligned with the route declared in the e-way bill is not sufficient to invoke proceedings under Section 129 of the West Bengal Goods and Services Tax Act, 2017 ( WB GST Act ) unless it is clearly established that there was an intention to evade tax. The...
The Calcutta High Court has held that a mere change in the transportation route or interception of a vehicle at a location not aligned with the route declared in the e-way bill is not sufficient to invoke proceedings under Section 129 of the West Bengal Goods and Services Tax Act, 2017 ( WB GST Act ) unless it is clearly established that there was an intention to evade tax.
The petitioner, Shekhar Kumar @ Shekhar Bagaria, a registered dealer under the 2017 Act, had challenged the penalty order dated May 22, 2024, issued by the Deputy Commissioner of State Tax, Bureau of Investigation, North Bengal HQ, Siliguri, which was later affirmed by the Appellate Authority on January 16, 2025.
The penalty was imposed following the interception of the petitioner’s conveyance on May 17, 2024, during the movement of goods. Authorities alleged two grounds for the action: (i) the person in charge of the vehicle failed to produce a physical copy of the tax invoice, and (ii) the vehicle was not on the declared route as per the e-way bill.
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While the petitioner admitted to showing an image of the tax invoice on a mobile device, it was argued that this amounts to sufficient compliance under Rule 138A of the West Bengal GST Rules, 2017, especially in light of technological alternatives such as Quick Response (QR) codes and electronically embedded Invoice Reference Number (IRN).
The petitioner relied on earlier judgments, including J.K. Jain Buildtech India Pvt. Ltd. v. Assistant Commissioner and Ashok Sharma v. State of West Bengal, to argue that electronic production of tax invoices should be deemed adequate.
Justice Hiranmay Bhattacharyya, however, clarified that under Rule 138A(1)(a), the person in charge of a conveyance is statutorily required to carry a physical copy of the tax invoice, unless the invoice is generated under sub-rule (4) of Rule 48, in which case an electronically verifiable QR code may suffice. Since the petitioner had not produced an invoice in such a form, this part of the argument was not accepted.
The bench turned its attention to the second ground: route deviation. The Court observed that neither the Act nor the Rules require disclosure of the transportation route.
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Stating judgments from the Allahabad and Karnataka High Courts, including Vishal Steel Supplier v. State of U.P. and Transways India Transport, the Court stated that mere route deviation cannot be presumed to indicate tax evasion. It further held that the absence of any discrepancy in the goods’ quality, quantity, or declared destination reinforced the fact that there was no fraudulent intention.
In addition, the Court also noted that the appellate authority failed to establish any mens rea (intention) to evade tax and that the tax invoice had, in fact, been placed on record in the writ proceedings. There was also no claim by the revenue authorities regarding short payment or evasion of tax liability.
Considering the view taken by the Division Bench in Ashok Sharma v. State of West Bengal, the Court reiterated that Section 129 proceedings cannot be invoked in the absence of intent to evade tax, especially when documentation is substantially in order and goods are accompanied by a valid e-way bill.
Accordingly, the bench quashed the penalty orders dated May 22, 2024 and January 16, 2025, and allowed the writ petition. It directed the authorities to refund the penalty amount already deposited by the petitioner within three weeks upon receipt of the order and the refund application.
To Read the full text of the Order CLICK HERE
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Shekhar Kumar @ Shekhar Bagaria vs The State of West Bengal & Ors. , 2025 TAXSCAN (HC) 842 , WPA 594 of 2025 , 03 April 2025 , Dhiraj Lakhotia , Joyjit Choudhury