Recipient Cannot Be Penalised For Supplier's Failure To Generate E-Invoice: GSTAT Thiruvananthapuram

The Goods and Services Tax Appellate Tribunal (GSTAT), Thiruvananthapuram, has held that a recipient of goods cannot be penalised under Section 129(1) of the Central and Kerala Goods and Services Tax Acts for the supplier's failure to generate an e-invoice when the transporter carries a proper tax invoice and a valid e-way bill.

A bench of Vice-President Subramanya Rayaprol and Technical Member Ramamoorthi Sriram observed, “We therefore, find that the penalty levied on the recipient of goods, under Section 129(1) is not at all sustainable as there is no justification for penalizing the appellant as a recipient of goods, for non-preparation of e-invoice, by the supplier of goods from another state, even where the Tax Invoice and e-way bill was already available with the transporter at the time of interception of the vehicle.”

The case arose from Tasty Nut Industries moving 4,182 kg of cashew kernels from its Tamil Nadu GST registration to its Kerala registration. The consignment was accompanied by a tax invoice and a valid e-way bill.

The Assistant State Tax Officer intercepted the vehicle at Ithikara, Kollam, citing the supplier's failure to generate an e-invoice. The authorities detained the goods and imposed a penalty of ₹1,01,631 under Section 129(1) of the CGST/KGST Acts. The first appellate authority upheld the penalty.

The company argued that the invoice and e-way bill accompanied the goods and that there was no discrepancy in their quantity or description. The department contended that the two registrations were distinct persons and that the transaction attracted IGST. It also argued that the e-invoice requirement was mandatory.

The appellate tribunal agreed that the transaction was an interstate supply. However, it held that the recipient could not be penalised for the supplier's failure to generate an e-invoice when the prescribed documents accompanied the goods.

The tribunal observed that “the non-issuance of e-invoice, it cannot be a ground for detention of the vehicle and imposing penalties."

It held that issuing the e-invoice was the supplier's responsibility and that the supplier's omission could be examined separately by the jurisdictional GST officer.

Relying on decisions of the Kerala and Allahabad High Courts, it set aside the penalty and allowed the appeal.

For Appellant: K.R. Balachandran, Advocate

For Respondent: Vineeth U. Krishnan, Authorised Representative