2022 (12) TMI 591 - HC - GST

Detention of goods - Levy of penalty - correct description of goods - the goods sold were on the basis of number of pieces and not according to the weight - old and damaged batteries - HELD THAT - The description of the batteries given in the tax invoice is under two headings, i.e., large damaged battery and small damaged battery. In the reply furnished by the petitioner in paragraph 3, it has been stated that the battery is purchased and sold on the basis of per piece and not on the basis of weight. The Adjudicating Authority while passing the order has not recorded any finding as to how the explanation accorded by the petitioner cannot be accepted and the trade practice of purchase and sale of battery is according to weight and not per piece. Similarly, the First Appellate Authority has failed to record any finding as to how it has arrived to the conclusion that the trade practice required the battery to be sold is according to the weight and not per piece, when the specific case of the petitioner was that he was purchasing and selling the battery on the basis of per piece and was maintaining the Books of Account, which has not been denied by the Taxing Authority. The Assistant Commissioner had wrongly detained the truck along with the goods of the petitioner and imposed a penalty - Amount deposited is to be refunded - Decided in favor of assessee.

Summary

Issues:
Challenge to detention order and penalty imposition on the basis of sale of old batteries per piece instead of weight.

Analysis:
The petitioner, engaged in the sale and purchase of old batteries, challenged the detention order and penalty imposed by the Assistant Commissioner. The petitioner sold 793 large damaged batteries and 7538 small damaged batteries to a buyer through a tax invoice. The truck carrying the goods was detained for verification under relevant GST Acts. The Assistant Commissioner imposed a penalty of Rs.9,70,542/-, which the petitioner paid to release the truck and goods. The petitioner appealed to the Additional Commissioner, who upheld the penalty order citing that the batteries were sold per piece, not by weight.

The petitioner argued that the batteries were old and damaged, purchased and sold per piece, and clearly described in the invoice. The petitioner contended that there was no attempt to evade tax, and the trade practice was per piece sale. The Standing Counsel defended the penalty, alleging tax evasion and invoking Rule 46 of CGST Rules, 2017.

The High Court examined the case and found that the petitioner dealt in old batteries, sold per piece as detailed in the tax invoice. The Court noted that neither the Assistant Commissioner nor the Appellate Authority justified why the per piece sale practice was incorrect. The Court also observed that Rule 46 of CGST Rules did not support the State's argument. Consequently, the Court set aside the detention order and penalty, ruling in favor of the petitioner.

In conclusion, the High Court allowed the writ petition, directing the authorities to refund the penalty amount within one month. The judgment emphasized that the detention order and penalty lacked legal basis as the trade practice of selling old batteries per piece was valid, and the authorities failed to provide adequate reasoning for their decision.