In a recent decision, the Allahabad High Court quashed a penalty imposed under Section 129 of the Goods and Services Tax (GST) Act due to a minor clerical error. The case involved M/s Ashok Kumar Maganbhai Patel, who transported goods from Gujarat to West Bengal. The consignment was accompanied by all valid documents, including an invoice, e-way bill, and railway receipt, without any mismatches. However, the goods were detained because the "ship-to" address had an incorrect digit in the PIN code, despite the rest of the address being correct.
The petitioner was penalized ₹21,98,870, which was paid to release the goods. On appeal, the challenge was dismissed without proper consideration of a Central Board of Indirect Taxes and Customs (CBIC) circular, which states that minor clerical errors like an incorrect PIN code should not lead to detention if other documents are correct. The High Court held that this circular is binding and that actions contrary to it are unsustainable, referencing the Supreme Court judgment in Usha Martin Industries.
Read More: GST - Karnataka High Court: Minor mismatch in description of goods in transport documents cannot justify detention or penalty under Section 129 without evidence of tax evasion [Order attached]
The court found no other discrepancies in the consignment and ruled that the detention and penalty were unjustified, as a typographical mistake does not imply tax evasion. Consequently, the orders imposing the penalty and upholding the detention were quashed, and the court ordered a refund of the deposited amount to the petitioner according to the law.
Parties: M/s Ashok Kumar Maganbhai Patel v. State of U.P. & Ors.
Order Date: 25 November 2025
Facts
- The petitioner transported goods from Gujarat to West Bengal in a bill-to-ship-to transaction. The consignment was accompanied by valid invoice, e-way bill, and railway receipt, and no mismatch was found in any document.
- The goods were detained solely because one digit of the PIN code of the “ship-to” address was incorrectly entered, despite the entire address being correct.
- Section 129(3) proceedings were initiated, imposing a penalty of ₹21,98,870, which the petitioner deposited to secure release of the goods.
- On appeal, the authority dismissed the challenge without properly considering the CBIC Circular dated 14.09.2018 (Circular No. 64/38/2018-GST). The petitioner relied on the CBIC circular and the Supreme Court judgment in Usha Martin Industries (1997) 7 SCC 47, emphasizing that departmental circulars are binding and minor clerical errors cannot attract detention.
Issue
- Whether proceedings under Section 129 can be initiated and penalty imposed solely for a minor clerical error in the PIN code, when all other transport documents are correct and there is no indication of tax evasion?
Order
- The High court held that CBIC Circular 64/38/2018-GST (Clause 5(b)) is binding, and expressly states that wrong PIN code, when the address is otherwise correct, cannot justify Section 129 action, provided the error does not extend e-way bill validity.
- No other discrepancy was found in the consignment, and all documents were valid; hence detention and penalty lacked jurisdiction.
- Following Usha Martin Industries (SC), the Court reiterated that circulars bind departmental officers, and contrary actions are unsustainable. A mere typographical mistake in one digit of the PIN code cannot imply intent to evade tax, nor can it justify seizure or penalty under Section 129.
- Therefore, Orders imposing penalty and upholding detention are quashed. Any amount deposited by the petitioner must be refunded as per law.
