2023 (1) TMI 1311 - Commissioner - GST

Penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act 2017 - E-way bill not generated at the time of dispatch - huge difference in the value of goods declared in the Delivery Challans issued by the appellant - Stock transfer or goods removed to another person - HELD THAT - The penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act 2017 for violation of provisions made under the Central Goods and Services Tax Act 2017 and rules made thereunder. The appellant is a registered company and has a good reputation in the market of windmill. Further events made for not following the provisions of GST Law are inadvertently and there is no mala fide intention of the appellant to evade payment of GST. Therefore the various plea made by the appellant in respect of imposing a minor penalty for this bona fide mistake is genuine and proper. The penalty imposed under clause (a) of Section 129(1) of the Central Goods and Services Tax Act 2017 by the adjudicating authority and calculating 200% of tax amount. The transaction in question is not attracting any tax liability as the same is stock transfer and goods removed under Delivery Challans. This action of the appellant is not attracting any tax liability under GST Law only procedures are prescribed for such transactions such as the issuance of a Delivery Challan for the movement of such goods and the issue of an e-way bill. As per the definition provided under section 2(47) of the said act prescribed such type of non-taxable supply also considered as exempt supply . Therefore the stock transfer of goods by the appellant is considered as exempted goods. Any contravention of provisions made under the Central Goods and Service Tax Act 2017 and rules made thereunder during the transit of goods the same should be penalized under section 129 ibid. In present case it is undisputed facts that the E-way is not tendered by the transporter. The contention of the appellant in this regard is that there was glitch in GST E-way Portal hence E-way was not generated - the goods in question is non-taxable and as per Section 2(47) ibid the goods which are non-taxable also considered as exempted supply hence penalty provision provided under section 129(1) ibid related to exempted goods is applicable in the present case. Therefore the Order for penalty under section 129(1)(a) of the Central Goods and Services Tax Act 2017 is amended and the penalty Rs. 25, 000/- under the Central Goods and Services Tax Act 2017 and Rs. 25, 000/- under of the Gujarat Goods and Services Tax Act 2017 is imposed instead of Penalty of Rs. 42, 22, 604/- each under imposed under the Central Goods and Services Tax Act 2017 and the Gujarat Goods and Services Tax Act 2017. Appeal allowed in part.

Issues Involved:
1. Validity of the penalty imposed under Section 129(1)(a) of the Central Goods and Services Tax Act, 2017.
2. Consideration of principles of natural justice and procedural lapses.
3. Classification of the goods as stock transfer and its implications on tax liability.
4. Applicability of Circular No. 64/38/2018-GST.
5. Intention of tax evasion and consideration of judicial precedents.
6. Voluntariness of the penalty payment.
7. Opportunity of being heard and adherence to natural justice.
8. Appropriateness of the penalty amount.

Detailed Analysis:

1. Validity of the Penalty Imposed Under Section 129(1)(a) of the Central Goods and Services Tax Act, 2017:
The appellant was penalized under Section 129(1)(a) for discrepancies found during the interception of their conveyance. The adjudicating authority imposed penalties due to the absence of an E-way bill and discrepancies in the delivery challans. The appellant argued that the goods were stock transfers and not subject to GST, thus challenging the penalty's validity. The appellate authority found that the penalty imposed was excessive and reduced it to Rs. 25,000/- under both the Central and Gujarat GST Acts.

2. Consideration of Principles of Natural Justice and Procedural Lapses:
The appellant contended that the impugned order was issued without proper inquiry and without following the principles of natural justice. The appellate authority acknowledged that the appellant was not given a fair opportunity to be heard, which is a violation of natural justice. This was a significant factor in the decision to reduce the penalty.

3. Classification of the Goods as Stock Transfer and Its Implications on Tax Liability:
The appellant claimed that the goods were stock transfers within the state and thus not subject to GST. The appellate authority agreed that the goods were exempt from tax as they were stock transfers, which are considered non-taxable supplies under Section 2(47) of the GST Act. This classification influenced the reduction of the penalty.

4. Applicability of Circular No. 64/38/2018-GST:
The appellant referenced Circular No. 64/38/2018-GST, which states that proceedings under Section 129 cannot be initiated if the consignment has an invoice and E-way bill. The appellate authority found this circular relevant but noted that the E-way bill was not generated at the time of dispatch, which justified the initial detention.

5. Intention of Tax Evasion and Consideration of Judicial Precedents:
The appellant argued there was no intention to evade tax and cited several judicial precedents advocating for a lenient approach in cases of minor procedural lapses. The appellate authority recognized the absence of mala fide intent and considered the precedents, leading to a reduction in the penalty.

6. Voluntariness of the Penalty Payment:
The appellant paid the penalty under protest, claiming coercion due to the urgent need to release the goods. The appellate authority acknowledged this context, which contributed to the decision to reduce the penalty.

7. Opportunity of Being Heard and Adherence to Natural Justice:
The appellant argued that they were not given a proper opportunity to be heard, violating natural justice. The appellate authority agreed, noting that the impugned order was issued without adequate hearing, which warranted a reduction in the penalty.

8. Appropriateness of the Penalty Amount:
The appellate authority found the initial penalty amount of Rs. 42,22,604/- each under CGST and SGST Acts to be excessive. Considering the nature of the violation and the appellant's bona fide mistake, the penalty was reduced to Rs. 25,000/- under each Act.

Conclusion:
The appellate authority modified the impugned order, reducing the penalty to Rs. 25,000/- under the Central Goods and Services Tax Act, 2017, and Rs. 25,000/- under the Gujarat Goods and Services Tax Act, 2017. The appeal was partially allowed, recognizing the procedural lapses, absence of tax evasion intent, and the nature of the goods as stock transfers.

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