2023 (12) TMI 1310 - HC - GST

Levy of penalty u/s 129 (3) of the West Bengal Goods and Services Tax Act, 2017 on goods detained - e-way bill did not contain the registration number of the vehicle transporting the goods - due to technical snag in the first vehicle (for which e-way bill was generated), the goods were transferred to second vehicle - case of appellant is that the driver of the first vehicle was ignorant of the legal requirements and therefore, did not initiate the process of generating a further e-way bill. HELD THAT - In the facts of the present case, e-way bill in respect of the goods transported was yet to expire when, the new vehicle had been detained. The explanation given by the appellant that, the driver of the old vehicle did not know the law and therefore did not comply with the same and did not inform the appellant about the same, should have been evaluated, in the facts and circumstances of the present case, by the Adjudicating Authority in light of the e-way bill being valid till then in respect of the first vehicle. He has to deal with the defence raised by the defaulter by a reasoned order. That is the mandate of Section 129 (3) and (4) of the Act of 2017 read together. The Adjudicating Authority has not done so. The Appellate Authority has also overlooked such fact. Respondent has not contended that, the defence canvassed in the show cause notice and the grounds pressed in the appeal were not canvassed or pressed by the appellant at the time of hearing before the Adjudicating or the Appellate Authority. It is found that the impugned order of the Adjudicating Authority as upheld by the Appellate Authority to have violated the principles of natural justice, inasmuch as it has not spoken on the defence taken. Consequently, both the orders passed by them are set aside - Adjudicating Authority under the Act of 2017 is directed to decide on the show cause notice, in light of the reply to the show cause notice dated June 22, 2022, afresh after giving an opportunity of hearing to the appellant through its authorized representative - application disposed off.

Summary

Issues Involved:
1. Validity of the penalty imposed under Section 129(3) of the West Bengal Goods and Services Tax Act, 2017.
2. Consideration of the appellant's explanation for non-compliance.
3. Compliance with principles of natural justice by the Adjudicating and Appellate Authorities.

Summary:

Validity of the Penalty Imposed:
The appellant challenged the judgment and order dated March 3, 2023, by the learned Single Judge dismissing the writ petition against the penalty imposed under Section 129(3) of the West Bengal Goods and Services Tax Act, 2017. The appellant argued that a valid e-way bill was generated, and the goods were transferred to another vehicle due to mechanical failure of the first vehicle, with no intention to evade tax.

Consideration of the Appellant's Explanation:
The appellant contended that the Adjudicating Authority overlooked the grounds put forth in the reply to the show cause notice and did not consider the explanation for non-compliance. The appellant cited various judgments to support the argument that penalties should not be imposed without considering the explanation provided.

Compliance with Principles of Natural Justice:
The court emphasized that the Adjudicating Authority must comply with the principles of natural justice, which includes considering the explanation provided by the defaulter and issuing a reasoned order. The court noted that the Adjudicating Authority failed to allude to the response dated June 22, 2022, and proceeded mechanically to impose the penalty. The Appellate Authority also overlooked the appellant's defense.

Conclusion:
The court found that the impugned orders of the Adjudicating and Appellate Authorities violated the principles of natural justice as they did not address the appellant's defense. Consequently, both orders were set aside, and the Adjudicating Authority was directed to decide on the show cause notice afresh, considering the appellant's reply and providing an opportunity for a hearing. The judgment and order of the learned Single Judge were also set aside.