GSTAT Bengaluru Sets Aside Section 129 Penalty on Transformer Oil Sent as Balance of Earlier Invoiced Supply

The Goods and Services Tax Appellate Tribunal, State Bench Bengaluru, in Shilchar Technologies Limited Vs Commissioner of Commercial Taxes Karnataka, allowed an appeal against a penalty of ₹5,75,190 imposed under Section 129 of the Central Goods and Services Tax Act, 2017. The ruling deals with goods moving in lots against invoices already issued, and with the limits on an officer's power to pass a detention order quickly.

Background of the dispute

The appellant manufactures and supplies electronics, telecom and power and distribution transformers, together with parts such as transformer oil. It despatched 114 drums of transformer oil from Gujarat to Tamil Nadu under an e-way bill and delivery challan no. 469 dated 29.12.2021. According to the appellant, the oil was the remaining portion of material belonging to transformers already supplied under Invoice Nos. 1195, 1196, 1208, 1209, 1207, 1227 and 1228, all raised in December 2021 and carrying integrated tax. The invoices themselves stated that the balance material would follow in another vehicle.

The vehicle was intercepted at Managuli, NH-50, Vijayapur, on 01.01.2022 at 11.15 PM. As per the officer's record, the documents described the item as a 10MVA, 33/4x0.660 KV, OCTC, oil type inverter transformer (HSN 85042310) with taxable value of Rs.15,97,750/-, quantity 1.00 No., with no tax collected, which did not match the physical goods. The appellant emailed copies of seven e-invoices and e-way bills, but the officer treated them as relating to a completed transaction.