Ratnaka Enterprises v. State of West Bengal
In favour of the assessee
The ruling in brief
Ratnaka Enterprises filed a writ before the High Court of Calcutta (WPA No. 24249 of 2024, decided 10 September 2026) against a penalty equal to 200 percent of tax on goods in transit under Section 129 of the CGST Act. At police interception the only lapse identified was non-extension of the e-way bill under Rule 138 and Section 68; the materials on record showed no other contravention such as invoice mismatch or tax evasion. The court found the penalty disproportionate to the proven default and procedurally unfair, violating natural justice. Authorities were directed to refund amounts recovered as penalty. The outcome favoured the assessee. Expiry of e-way bill validity during transit alone did not justify maximum penalty where no further evasion was established on facts.
For information only — not legal advice. Read the full judgment and applicable law before relying on this summary.
Provisions considered
- CGST S.129 — Detention, seizure and release of goods and conveyances in transit.
- CGST S.68 — Section 68 of the Central Goods and Services Tax Act, 2017.
- CGST Rules R.138 — Rule 138 of the Central Goods and Services Tax Rules, 2017.
Source documents
Similar rulings
In favour of the assessee
Danish Hassan v. UT of J&K
Danish Hassan filed a writ before the High Court of Jammu & Kashmir and Ladakh (WP(C) No. 2538 of 2024, 7 September 2026) against penalty and detention orders under Section 129 of the CGST Act. Goods and a conveyance had been intercepted and detained; the show cause notice under the mandatory timeline was served more than seven days after detention—even by one day. The court held that Section 129 requires strict compliance with the seven-day period for notice from the date of detention, protecting taxpayers against prolonged detention without timely process. The delay vitiated the entire penalty proceedings. All consequent orders were set aside. The outcome favoured the assessee. Timely SCN issuance is not a mere formality under Section 129.
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Mohd Hazzak Lohar approached the High Court of Jammu & Kashmir and Ladakh (WP(C) No. 2434 of 2025, decided 23 July 2026) against a Section 129 penalty on goods in transit. Goods were intercepted and a show cause notice under Section 129(3) was issued, but the final penalty order was passed beyond the mandatory seven-day period measured from detention. Relying on Section 129 read with Section 169, the court reiterated that strict statutory timelines are mandatory and not directory. Delay beyond the permitted window rendered the penalty order invalid in law. The impugned order was quashed and the outcome favoured the assessee, consistent with parallel jurisprudence on Section 129 time limits in the same High Court including Danish Hassan. This editorial summary is not legal advice.
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Vikas Kumar Omar v. Principal Commissioner of CGST Commissionerate at Rohtak
Vikas Kumar Omar filed a writ before the High Court of Punjab & Haryana (decided 14 July 2026) against penalty imposed under Sections 122 and 126 of the CGST Act without issuance of a prior show cause notice and without affording reasonable opportunity of being heard. Non-compliance with the statutory mandate of natural justice in penalty proceedings vitiated the impugned order ab initio. Section 126 requires consideration of mitigating factors only after proper adjudicatory process is followed. The court quashed the unsustainable penalty. The outcome favoured the assessee. Penalty under the CGST framework cannot be imposed without SCN and a fair hearing, regardless of the strength of the revenue's underlying allegations on bogus credits or invoices. This editorial summary is not legal advice.