2023 (1) TMI 1237 - HC - GST

Seizure of goods alongwith vehicle - levy of penalty - it is alleged that the goods were not matching with the invoices as certain goods were found either to be more or less than the quantity mentioned in the invoices - HELD THAT - The present writ petition deserves to be allowed and the order impugned dated October 7, 2022 deserves to be set aside for the reason that the consignors and consignees are present and accepting ownership of the seized goods. The consignors are registered dealers in the State of U.P. In view of the clarification given by the Board vide its Circular dated 31, 2018, levy of penalty under Section 129(1)(b) of the Act was not called for and could not be justified as Section 129(1)(a) of the Act provides that where owner of the goods comes forward for payment of penalty, the amount has to be two hundred per cent of the tax payable, whereas, in the case in hand, the penalty has been levied to the tune of hundred per cent of the value of the goods. The impugned order dated October 7, 2022 passed by respondent no. 2 is set aside. The writ petition is allowed - The matter is remitted back to the competent authority for passing fresh order within a period of two weeks from the date of receipt of copy of the order.

Summary

Issues: Challenge to orders passed on GST MOV-06, GST MOV-07, and GST MOV-09 under U.P. Goods and Services Tax Act, 2017.

Analysis:
1. The petitioners challenged the order passed on GST MOV-06 where goods in transit were seized, along with the show cause notice on GST MOV-07 and the subsequent order on GST MOV-09. The petitioners argued that despite proper documentation accompanying the goods, the authorities deemed the driver as the owner, imposing a penalty under Section 129(1)(b) of the U.P. Goods and Services Tax Act, 2017.

2. The petitioners contended that according to Section 129(1)(a) of the Act, if the owner of the goods steps forward, the penalty should be levied on them. They referred to a circular by the Central Board of Indirect Taxes and Customs, stating that if goods are accompanied by invoices, the consignor should be considered the owner. As the petitioners were either consignors or consignees, the penalty under Section 129(1)(b) was deemed inapplicable.

3. On the other hand, the respondents argued that discrepancies were found between the goods and the invoices, justifying the penalty imposed on the petitioners. However, the Court noted that the consignors and consignees were present, accepting ownership of the goods, and being registered dealers in U.P., the penalty under Section 129(1)(b) was unjustified.

4. The Court, after considering the arguments, allowed the writ petition, setting aside the order dated October 7, 2022. It was observed that the penalty levied was not in line with Section 129(1)(a) of the Act, which mandates a penalty of two hundred per cent of the tax payable when the owner steps forward, whereas in this case, the penalty was a hundred per cent of the value of the goods.

5. Consequently, the impugned order was overturned, and the matter was remitted back to the competent authority for a fresh decision within two weeks from the date of receipt of the Court's order.