GST Penalty Sustained Against Registered Dealer Who Declared Himself as Unregistered Person in E-Way Bill — Calcutta High Court
Case Overview: Jageswar Saw Vs Deputy Commissioner of Revenue (Calcutta High Court)
The Calcutta High Court, in a significant ruling, dismissed an appeal filed against detention of an excavator and imposition of penalty under Section 129 of the West Bengal Goods and Services Tax Act, 2017. The Court affirmed that a registered assessee's false declaration of URP (Unregistered Person) status in the e-way bill, combined with an improperly executed delivery challan, constituted sufficient grounds for the tax authorities to detain goods and levy penalty. The judgment reinforces several critical principles governing GST compliance during inter-state transit.
Background and Factual Matrix
The appellant, operating a sole proprietorship concern by the name M/s. N.S. Construction out of Jharkhand, was engaged in providing leasing and rental services pertaining to construction machinery and equipment. The business model involved supplying machinery — with or without operators — based on client requirements.
In the course of business, the appellant received a work order from M/s. B.C.C. Buildtech Private Limited, a company registered in Haryana, for supply of a hydraulic excavator along with a driver on a rental basis at a monthly charge of ₹2.30 lakh. The excavator was to be deployed at the company's worksite in Shillong, Meghalaya.
Upon receipt of the work order, the appellant procured the excavator from a supplier located in Jharkhand and arranged for its transportation to Meghalaya via a trailer service. The route of transportation passed through West Bengal, which the appellant contended was merely a transit corridor with no commercial nexus to the transaction.
Interception and Grounds for Detention
On November 25, 2023, officials from the Bureau of Investigation, North Bengal, Alipurduar Zone intercepted the vehicle during a routine inspection. The driver of the transport vehicle, one Umesh Yadav, produced the following documents on demand:
- A delivery challan issued by M/s. N.S. Construction
- An e-way bill dated November 22, 2023, generated by the appellant declaring himself as an Unregistered Person (URP)
- A consignment note of the same date issued by the Jharkhand trailer service
- A photocopy of the tax invoice from the vendor, showing the appellant as the purchaser of the excavator
Upon physical verification, two critical irregularities emerged:
- The appellant, despite being a duly registered person under the Jharkhand GST Act, 2017, had generated the e-way bill by declaring his status as a URP — an admission that was factually and legally incorrect.
- The delivery challan was signed by Umesh Yadav, the driver of the transport vehicle, who was not the authorized signatory of the appellant's proprietorship concern.
On account of these contraventions, the goods were detained under Section 129 of the West Bengal Goods and Services Tax Act, 2017. A demand was raised and an order was passed on December 6, 2023. The appellant challenged this before the appellate authority, which rejected the appeal and confirmed the penalty order under Section 129(3) vide its order dated February 29, 2024. This appellate order was subsequently challenged before the learned Single Judge by way of WPA No. 635 of 2024, which too was dismissed on July 4, 2025, prompting the present appeal before the Division Bench.
Arguments Advanced by the Appellant
The appellant's counsel raised the following contentions before the Division Bench: