Orissa High Court flags natural justice breach in GST detention without notice to consignor
Background of the dispute
The matter in Gopal Enterprises Vs Chief Commissioner of Commercial Tax and GST (Orissa High Court) concerns detention of a consignment and imposition of penalty under the Odisha Goods and Services Tax Act, 2017 where the registered owner of the goods was not issued any prior notice.
The assessee, acting as consignor and owner of the consignment, had supplied “Areca Nut Chura (Dust)” weighing 27,550 kg to a consignee based in Patna. The consignment was valued at ₹60,74,775 as reflected in the tax invoice. The goods were handed over on 20 January 2026 to the transporter “Saawariya Cargo Movers” for movement from Nagpur to Patna, to be delivered to opposite party no.3 – Consignee bearing GSTN: 10CXZPV7593K1ZA.
A valid tax invoice was prepared and issued. However, the consignment moved without an accompanying e-way bill. According to the assessee, this occurred because of:
- Technical issues in generating the e-way bill, and
- Miscommunication between the assessee and the transporter.
The assessee, who was engaged in both wholesale and retail activity, depended upon its accountant for generating tax invoices and ensuring GST compliance, including e-way bill generation. Due to difficulties in generating the e-way bill, it was not provided to the transporter at the time the goods were dispatched.
Detention and penalty proceedings
Vehicle detention
While the goods were in transit, the vehicle bearing registration No. OD-15-W-1994 was intercepted and detained by opposite party no.2 on 23 January 2026. At the time of inspection, the authorities alleged that:
- The driver did not produce any documents,
- Specifically, no tax invoice and no e-way bill were available with the driver.
Consequently, the consignment and the vehicle were detained.
Penalty order under Section 129(1)(b)
Subsequently, on 30 January 2026, an order was passed under Section 129(1)(b) of the Odisha Goods and Services Tax Act, 2017 (OGST Act). Key features of this order were:
- The value of the consignment was re-determined by the authorities at ₹1,10,20,000, significantly higher than the invoice value of ₹60,74,775.
- A penalty equal to 100% of the value of the goods was imposed under
Section 129(1)(b). - The penalty order was issued in the name of the driver, on the reasoning that the “owner did not come forward”.
The assessee had not been served with any notice prior to detention or before issuance of the penalty order.
Knowledge of the order by the assessee
The assessee’s version was that it became aware of the detention and the penalty proceedings only on 5 February 2026, when:
- The consignee, and
- The transporter
informed it about the detention and the penalty order dated 30 January 2026.