2023 (1) TMI 1238 - HC - GST

Levy of penalty under Section 129(1)(b) of UPGST Act - respondents submitted that the petitioner having not come forward in response to notice issued for assessment of the amount the penalty was to be levied in terms of Section 129(1)(b) of the Act - HELD THAT - The order imposing penalty on the petitioner passed under Section 129(1)(b) of the Act deserves to be set aside. It is undisputed case of the parties that the goods were accompanied by invoice and e-Way Bill wherein the name of the petitioner is mentioned as consignor. The fact that the petitioner is a registered dealer is also not in dispute as even survey of petitioner s business firm was carried out immediately after detention of the goods and the firm was found to be carrying on its business. Once the documents clearly establish the name of the consignor who is a registered dealer in the State the proceedings should have been initiated against the owner of the firm instead of the driver so as to enable him to respond to the notice. In any case once from the facts on record which have gone undisputed the petitioner who is consignor in the invoice and e-Way Bill claims himself to be the owner of the goods the provisions of Section 129(1)(b) of the Act could not be invoked for imposing penalty. The impugned order dated December 15 2022 passed by the respondent no. 2 is set aside giving him the liberty to pass fresh order in accordance with law after affording opportunity of hearing to the petitioner - Petition allowed.

Summary

Issues:
1. Interpretation of Section 129(1)(a) and 129(1)(b) of the U.P. Goods and Services Tax Act, 2017.
2. Opportunity of hearing for consignor in case of penalty imposition.
3. Applicability of Central Board of Indirect Taxes and Customs circular on consignor/consignee ownership.
4. Validity of penalty imposition on consignor without proper notice.

Analysis:

1. The petitioner challenged an order passed against them under Section 129(1)(b) of the U.P. Goods and Services Tax Act, 2017, regarding the release of goods. The petitioner, a consignor, argued that they were not given a hearing opportunity as the order was passed against the driver of the vehicle. The petitioner contended that the order should have been passed under Section 129(1)(a) if the owner of the goods had come forward for penalty payment. Reference was made to a circular by the Central Board of Indirect Taxes and Customs stating that either the consignor or consignee should be deemed the owner if the invoice accompanies the goods.

2. The respondents argued that since the petitioner did not respond to the notice for assessment, the penalty was rightly imposed under Section 129(1)(b) of the Act. They maintained that Section 129(1)(a) would apply only if the owner of the goods steps forward for penalty payment.

3. The court found that the documents clearly identified the petitioner as the consignor, a registered dealer in the State. The court noted that a survey of the petitioner's business premises revealed no irregularities, supporting the petitioner's claim of ownership. The court emphasized that proceedings should have been initiated against the owner of the firm, not the driver, to allow a proper response to the notice. The court held that since the petitioner claimed ownership as the consignor, Section 129(1)(b) could not be invoked for penalty imposition.

4. Consequently, the court set aside the order imposing a penalty on the petitioner and directed the respondent to pass a fresh order after providing a hearing opportunity to the petitioner within two weeks. The court allowed the writ petition in favor of the petitioner.