GST Detention and Penalty Set Aside as HC Holds Invoice Value Cannot Be Enhanced

The petitioner challenged the detention of its goods and vehicle and the order dated 14.11.2025, passed under Section 129 of the CGST Act read with the IGST Act. The GST authorities had invoked Section 129(1)(b) while computing tax and penalty.

During the hearing, the petitioner confined the challenge only to the proceedings under Section 129, contending that it was the undisputed owner of the goods and that the release ought to have been governed by Section 129(1)(a). It was further argued that the authorities illegally enhanced the valuation beyond the invoice value for imposing penalty.

Issue Before Court: Whether, where the owner of the goods comes forward, proceedings under Section 129 must be governed by Section 129(1)(a) of the CGST Act, and whether valuation can be enhanced beyond the invoice value for levy of penalty.

HC’s Order: The Hon’ble High Court allowed the writ petition. Relying on earlier decisions including Halder Enterprises and S.K. Trading Co., the court held that once the owner of the goods is identifiable and comes forward, release must be governed by Section 129(1)(a).

The Court further held that valuation cannot be enhanced for the purpose of penalty and must be based strictly on the invoice and e-way bill. The impugned order dated 14.11.2025 was quashed, and the authorities were directed to redo the exercise under Section 129(1)(a) on invoice value within three weeks.

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