2022 (8) TMI 96 - HC - GST

Levy of penalty - Detention of goods alongwith vehicle - wrong E-way bill - levy of tax and penalty on the ground of petitioner s transporter on being intercepted was found to carry GST paid goods to petitioner s office at Jabalpur whereas e-way bill generated showed destination at Indore - Section 129 of CGST Act - HELD THAT - It is evident that strictly going by the terminology used in the immunity provision under Clause 5 of the circular dated 14.09.2018, the benefit flowing wherefrom may not be available to the petitioner but this Court hastens to add that in penal provision such as Section 129 of the GST Act, the element of intention to evade tax must be present to sustain an order of penalty. To gather the intention of the petitioner an inquiry has to be undertaken to ascertain whether the mistake was inadvertent with no element of malice or intention to evade tax - It does not appear that either the Taxing Authority or the appellate authority has undertaken the said exercise of conducting an inquiry to ascertain the real intent behind the act of petitioner to mention wrong address. This Court has no manner of doubt that an inquiry needs to be conducted at the level of appellate authority to ascertain whether there was any malicious intention to evade tax on the part of the petitioner or not. Petition allowed in part.

Summary

Issues:
Challenge to the imposition of tax and penalty based on incorrect address in e-way bill; Interpretation of executive instructions for exemptions under Section 129 of the Central GST Act; Requirement of intention to evade tax for penalty under Section 129; Need for inquiry into the petitioner's intent; Applicability of previous court decisions on similar cases.

Analysis:

The judgment involves a challenge to the imposition of tax and penalty by the State Tax Officer on the petitioner's transporter for carrying GST paid goods to the wrong destination as per the e-way bill. The petitioner claimed a clerical error in mentioning the address in the e-way bill and referred to a previous court decision in support of their argument.

The Revenue, however, relied on an executive instruction dated 14.09.2018, specifically Clause 5, which lists contingencies where exemptions from Section 129 of the GST Act can be availed. The Revenue argued that the petitioner did not meet the conditions of the clause as the details of the consignee's address were incorrectly mentioned in the e-way bill, potentially indicating tax evasion.

The court noted that while the petitioner may not benefit from the immunity provision under Clause 5, the element of intention to evade tax is crucial for sustaining a penalty under Section 129. The court emphasized the need for an inquiry to determine whether the mistake in the address was inadvertent or had malicious intent.

It was observed that neither the Taxing Authority nor the appellate authority had conducted an inquiry into the petitioner's intent. The court distinguished previous court decisions cited by the petitioner, highlighting the differences in the facts of those cases where immunity under Clause 5 was available due to correct address details.

Consequently, the court partly allowed the petition, quashing the appellate order and directing the appellate authority to reconsider the appeal solely based on the presence or absence of any malicious intention to evade tax by the petitioner within three months. The judgment underscores the importance of establishing intent in tax-related penalties and the necessity of conducting inquiries into such matters.