A Division bench of the High Court of Jammu & Kashmir and Ladakh has held that Non possession of prescribed delivery challan at the time of delivery of goods is in violation of GST Act and invites penalty u/s 129 of the Act.

In the Case the State Tax Officer (STO) ceased a vehicle carrying gold ornaments while they were accompanied only by delivery note and not the delivery challan/bill of supply/invoice. The STO imposed a tax on the goods and imposed a penalty equal to 100% of the tax imposed. The petitioner had challenged the penalty order under Section 129(3) of J&K GST Act, 2017 on the ground that the goods were detainedd by State Tax Officer in interstate movement and there was no supply of goods where IGST Act was applicable as against J&K GST Act. It was contended that delivery note and delivery challan are both the same documents used for interstate movement of goods instead of Supply. Thus in absence of supply no penalty u/s 129 of the Act could be imposed. 

The Court held that there is a difference between delivery note and delivery challan. As per Rule 13(A)(1) of GST Act 2017 A delivery note is a mere document that accompanies a shipment of goods and 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. The court held that as per combined reading of Rule 138 & Rule 55 of CGST Rules, 2017 there is no substitute prescribed for delivery challan in case of supply of goods as such non-possession of the same will invite its own repercussions. A delivery note and deliver Challan are completely different as the former is a mere document that accompanies a shipment of goods while the latter has an impact on the inventory levels since it decreases the stock. The court accordingly dismissed the petition.