2023 (5) TMI 1018 - HC - GST

Levy of penalty u/s 129 (3) of CGST Act - case of petitioner is that due to breakdown of the vehicle, the same could not move through the State of Bihar within the currency of its validity - notice under Section 129(1)(a) of the Act and the order determining penalty under Section 129(3) of the Act are issued simultaneously on the same date - parallel proceedings - HELD THAT - This Court has gone through the notice under Section 129(1)(a) as well as the order imposing penalty on the same date i.e. 28.03.2022, contained in Annexure-6, both these orders have been issued by the proper officer simultaneously. It is ex facie evident that the notice and order have been recorded simultaneously by the same authority. The order imposing penalty does not record the fact of the petitioner s appearance or hearing prior to passing of the order. This Court would find that the notice issued under Section 129(1)(a) was nothing more than an empty formality as no time/opportunity has been allowed pursuant to the notice, and immediately, on the same date, penalty has been recorded under Section 129(3). The determination of penalty under Section 129(3) is, therefore, in contravention of the statutory requirement under Section 129 of the Act. The requisite compliance with principles of natural justice, inherent in Section 129(4) has thus been violated. The order imposing penalty is unsustainable and is hereby quashed. The matter is remanded to the Joint Commissioner of State Tax, Magadh Division, Gaya - Petition allowed.

Summary

Issues involved:
The judgment involves the legality of penalty imposed on the petitioner under the Central Goods and Services Tax Act for moving goods without a valid e-way bill, and the subsequent rejection of the petitioner's appeal by the first appellate authority.

Details of the Judgment:

1. The petitioner's vehicle was intercepted due to an expired e-way bill, leading to a penalty under Section 129(3) of the Act. The petitioner challenged this penalty along with the rejection of the appeal by the first appellate authority.

2. The petitioner argued that a breakdown of the vehicle prevented timely movement through Bihar, and the penalty should consider this circumstance. Additionally, it was contended that the notice and penalty order were issued simultaneously, without the mandatory opportunity for a show cause and hearing.

3. The State contended that the e-way bill had expired before the interception of the vehicle, and no extension request was made within the permissible time frame. The petitioner could not benefit from the provision allowing an extension within 8 hours of expiry.

4. The Court observed that the notice and penalty order were issued simultaneously, without evidence of the petitioner's hearing. This lack of opportunity for the petitioner violated the statutory requirements and principles of natural justice under Section 129(4) of the Act.

5. Consequently, the Court deemed the penalty order unsustainable and quashed it, remanding the matter to the Joint Commissioner of State Tax for proper consideration.

6. The petitioner agreed to appear before the authority with a response to the show cause, which must be evaluated with a due opportunity for hearing as per statutory provisions.

7. The Court directed the refund of 25 percent of the amount deposited by the petitioner for the appeal, to be processed within a week of the petitioner's appearance before the proper officer.

8. Ultimately, the writ petition was allowed in favor of the petitioner.