PIN Code Error of Consignor or Consignee Not Grounds for GST Detention: Allahabad HC Relies on Key CBIC Circular [Read Order]

In the recent ruling, the Allahabad High Court relied on the CBIC Circular and quashed the penalty imposed on goods detained solely due to a single-digit PIN code error in the consignee’s address, despite all other documents being in order.

The Petitioner, M/S Ashok Kumar Maganbhai Patel, engaged in the business of transporting goods, assailed the order dated 22.11.2024 along with demand reference no. 23.11.2024 passed by the Additional Commissioner.

The Petitioner had a specific consignment where the goods in question were in transit from Gujrat to West Bengal, which were duly accompanied with tax invoice, e-way bill and Railway Receipt (R.R). During transit, the goods were intercepted and subsequently seized by the respondent authorities. The sole premise for this action was an alleged discrepancy in the tax invoice, specifically, an incorrect digit in the PIN code associated with the 'ship to' party's address. It is crucial to note that the complete address of the consignee was accurately stated, and no other irregularity or deficiency was identified in any of the accompanying documents.

Despite furnishing a detailed explanation, the proceedings under Section 129 (3) of the Central Goods and Services Tax Act, 2017 were initiated against the petitioner and the order was passed by which penalty of Rs. 2198870/- was imposed.

The Section 129 (3) of the Central Goods and Services Tax Act, 2017 explained that: Detention, seizure and release of goods and conveyances in transit.

“The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).”

Under duress and to ensure the timely release of the urgently required goods, the petitioner was compelled to deposit the entire penalty amount. He filed an appeal which was also dismissed without considering the material on record.

The Counsel for the Petitioner, Atul Gupta, submitted that proceedings initiated under Section 129 of the Act and the subsequent imposition of penalty were entirely unjustified, being predicated solely on a minor technical error in the PIN code. He further argued that when the complete and correct address of the consignee was available and there was no underlying intent to evade tax, could not legitimately form the basis for seizure and penalty.

Further, the Counsel relied upon the Circular No. 64/38/2018 -GST issued by the Ministry of Finance, Dept. Of Revenue, Govt. of India on 14.9.2018, wherein it was clearly mentioned in Clause 5 (b) that if there was an error in PIN code but the address of consignor and consignee was correct, then the proceeding ought not to have been initiated under Section 129 of the Act.

Clause 5 (b) of the CBIC Circular No. 64/38/2018 -GST dated 14.09.2018 explained that:

“Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill.”

The Counsel also submitted that such circulars are unequivocally binding upon the departmental authorities, a principle authoritatively affirmed by the Apex Court in the landmark case of Collector of Central Excise, Patna Vs. Usha Martin Industries (1997) 7 SCC 47.

On the other hand, the Counsel for the Respondent, R.S. Pandey, ACSC, supported the impugned order and the actions taken in accordance with law.

The High Court composed of Justice PiyushAgrawal, heard and reviewed the matter filed by the petitioner.

After considering the material on record, the High Court addressed the circular that that proceedings under Section 129 of the Act may not be initiated if the address of the consignor or consignee was correct, provided a wrongly mentioned PIN Code in which the error did not affect the e-way bill's validity.

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Reaffirming the well-established legal principle regarding the binding nature of circulars on subordinate authorities, the Court explicitly referred to the Apex Court's decision in Collector of Central Excise, Patna Vs. Usha Martin Industries (supra).

Further, the court stated that the very initiation of the proceedings was inherently flawed, bad in law, and contrary to the true intent and spirit of the statute and the observed that the respondent authorities had failed to point out any other discrepancy in the accompanying documents, and the goods were indeed accompanied by all proper and prescribed documents. The Court also directed that any amount deposited by the petitioner shall be refunded in accordance with law.

Thus, the petition was allowed and impugned orders dated 22.11.2024 were set aside.

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