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COURT- JAMMU & KASHMIR AND LADAKH AT JAMMU(WP( C ) No-2322/2022
Key Issue- Operational-GST
Subject- Difference between “Delivery note” and “Delivery Challan”
Parties-M/s k Anil Jewelers V/s UT of J& K through Commissioner State
Adjudication- HON’BLE THE CHIEF JUSTICE HON’BLE MR N. KOTISWAR SINGH and JUDGE MS
JUSTICE MOKSHA KHAJURIA KAZMI
Date of Judgement-19
th December 2023
GENESIS- Petitioner has challenged the order dated 07.01.2020 passed by the State Taxes Officer
Enforcement (Central ) Jammu (“STO”) and order dated 31.08.2022 passed by the Deputy
Commissioner , State Taxes (Appeal-I)
➢ Factual Matrix of the case ;-
➢ State Taxes Officer, Enforcement (central) Jammu seized a vehicle bearing Registration No
JK02BK-1734 carrying the gold ornaments of the Petitioner worth Rs 77,96,650.10/-under
Section 68(3) of the J& K Goods and Services Tax Act , 2017 r/w section 68(3) of the Central
Goods and Services Tax Act ,2017 on 03.01.2020
➢ On verification of the document found that the gold ornaments were accompanied by
“delivery Note“ which as per the Respondents , was not a valid document for movement of
goods.
➢ The Officer detained the said vehicle along with the goods loaded therein and issued order of
detention u/s 129(1) of the Act of 2017 CGST Act r/w section 68(3) of the Act of 2017 in Form
Mov-06 and served notice for appearance on 03.01.2020. Subsequently, a notice was issued
in GST mov-07 to show cause as to why tax and penalty be not levied on the said goods in
terms of section 129(1) of the GST Act , 2017.
➢ In response , the petitioner expressed his consent to pay applicable tax and penalty whichever
is applicable stating that the goods were meant for sale on approval basis for which delivery
challan was issued by the supplier and the goods were accompanied by the letter from the
consignor wherein it was written that the goods are on approval basis. However, the copy of
the same was misplaced by the courier agency.
CAUSE OF ACTION
➢ STO has invoked penalty u/s 129(1) (a) of the Act , vide order dated 07.01.2020 impugned
before the appellate authority imposed tax to the tune of Rs 116965.00 under State/UT Tax
Rs 11965.00 under the CGST Act and penalty of similar amount i.e. Rs 116965.00 +
116965.00/-= Rs-2,33,930/-

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In Defense
➢ The Petitioner preferred an appeal u/s 107 of the State/UT Goods and Services Act and the
Central Goods and Services Tax Act,2017. The appeal was filed primarily on the ground that
the order u/s 129(3) of the J& K Act ,2017 was against the facts and circumstances of the case.
➢ STO has failed to adopt procedure as per GST circular dated 13.04.2018
➢ Goods were detained in interstate movement and if there was supply then IGST will be levied
of CGST and SGST as per section 5 of IGST Act but there was no supply hence the penalty u/s
129 of the Act of 2017 is void and invalid.
➢ The delivery note/challan is used for the purpose of movement of goods and not for supply,
therefore , in the absence of supply, no penalty u/s 129 of the Act can be imposed . Over and
above STO has obtained a cheque of Rs 4,67.,860/-
➢ Appellate Authority, after hearing the parties vide order impugned dated 31.08.2022
dismissed the appeal since there was no prescribed delivery challan accompanying the goods
but instead a self invented delivery note which is clear violation of the rule .Besides circular
No- 10/10/2017 GST ,provides any substitute for the prescribed delivery challan.
➢ The Petitioner has assailed order supra in the instant writ petition. The Court heard the parties
and perused the impugned orders ;
Finding of the Court;-
➢ It would be appropriate to have a look at the relevant provisions of the Act 2017. Section 129
of the Act which provides for procedure for detention, seizure and release of goods and
conveyances in transmit ;
1) Any person transport any goods or stores any goods while they are in transit in
contravention of the provisions of this Act or the rules made thereunder, all such goods
and conveyance used as a means of transport for carrying the said goods and documents
relating to such goods and conveyance shall be liable to detention or seizure and after
detention or seizure ,shall be released,—
a) On payment of the applicable tax and penalty to 100% of the tax payable on such
goods and if exempted goods then 2% of the value of the goods or Rs 25000/-
whichever is less.
b) On payment of 50% of the value of goods and 5% or Rs 25000/- in case of exempted
goods
c) Upon payment under clause (a) and (b). provided no such goods or conveyance shall
be detained or seized without serving an order of detention or seizure.. ..
2) The provisions of Sub section (6) of section 167 shall apply
3) On payment of amount referred in sub section, shall be deemed to be concluded.
➢ Section 130 will be applicable in perishable or hazardous in nature of Goods—within 7days

DELHI -NCR- 3FCS-70, Third Floor,
Ansal Plaza, Sector-1, Vaishali,
Ghaziabad – 201010, U.P
Email: – marketing@alacritycorp.com
Website: – www.alacritycorp.com
➢ In present case, the STO found that gold ornaments under transport were accompanied only
by a delivery note. Accordingly to STO , the delivery note is not the one as prescribed under
Rule 55 of the J& K GST Rules, 2017/CST Rules ,2017 and therefore ,not a valid document.
➢ In order to answer this question, let us understand the meaning of the term “delivery note”
and “delivery Challan” A delivery note is a mere document that accompanies a shipment of
goods. Delivery challan, on the other hand, is issued while making a delivery of goods to the
buyer and have an impact on the inventory levels since it decreases the inventory stock.
➢ Rule 138 (A) (1) of he GST Act , 2017 provides that the person in charge of the conveyance
shall carry (a) the invoice or bill of supply or delivery challan as the case may be and (b) a copy
of the e-way bill or the e-way bill or the e-way bill number , either physically or mapped to a
Radio Frequency Identification Device embedded to the conveyance in such manner as may
be notified by the Commissioner.
➢ Conclusion:
➢ From the perusal of aforesaid provisions, it is clear that the same does not provide for any
substitute to the prescribed delivery challan. Therefore, non- possession of prescribed
delivery challan at the time of seizure of the goods weakens the case of the petitioner.
➢ We are of the considered opinion that the aforesaid two grounds viz. non possession of valid
delivery challan along with document substantiate the strand of the petitioner that it was sent
for approval at the time of seizure of the goods and payment of tax and penalty voluntarily
deposited by the petitioner at the time of release of the goods are sufficient reasons to dismiss
the case of the petitioner. Accordingly, finding no infirmity in the impugned orders, the

present writ petition is dismissed being devoid of any merit.

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DISCLAIMER:
i)This opinion/clarification note is based on the facts provided to us and the same is
being issued without any knowledge of intent, prejudice, non-disclosure,
misrepresentation, or concealment of facts if any. 
ii)We have not done investigation of correctness of facts and the limited opinion
represents our understanding of the provisions of the law on the matter. The
compliance mentioned above is not exhaustive and other compliance may also be
involved depending on case to case basis.
iii)The conclusions reached and views expressed are matters of opinion based on
our understanding of the related laws, rules, notifications, Citations, circulars, etc.
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