2023 (6) TMI 360 - HC - GST

Recovery of penalty under Section 129(1)(b) of the UPGST Act, 2012 - detention order - doubt as to the genuineness of the consignee - applicability of Circular dated 31.12.2018 issued by Government of India - HELD THAT - While the revenue seeks to raise disputes based on its ex parte enquiries and other circumstance, upon query made, learned Standing Counsel could not dispute that at present the revenue has not formed any opinion to falsify the genuineness of the tax invoice and the E-way bill claimed by the petitioner. It also does not dispute that those documents were found present on the vehicle in question at the time of its first detention. It is further not in dispute that the present petitioner claims to be the owner of the goods. Accordingly, petitioner may remain liable to pay security in terms of Section 129(1)(a) of the Act. The coordinate bench in M/s Margo Brush India 2023 (1) TMI 1237 - ALLAHABAD HIGH COURT held that levy of penalty under Section 129(1)(b) of the Act was not called for and could not be justified as Section 129(1)(a) of the Act provides that where owner of the goods comes forward for payment of penalty, the amount has to be two hundred per cent of the tax payable, whereas, in the case in hand, the penalty has been levied to the tune of hundred per cent of the value of the goods. The impugned order MOV-09 dated 16.1.2023 is set aside. Matter is remitted to the respondent No. 2 to pass fresh order within a period of two weeks from today treating the petitioner to be eligible to the benefit of Section 129(1)(a) of the Act - petition allowed.

Summary

Issues Involved:
1. Quashing of order demanding penalty under Section 129(1)(b) of the UPGST Act, 2012 and detention order on GST MOV-06.
2. Release of goods and vehicle in accordance with provisions of Section 129(1)(a) of the Act.

The petitioner, a registered trader in iron scrap, filed a petition to quash the order demanding penalty under Section 129(1)(b) of the UPGST Act, 2012 and the detention order on GST MOV-06. The petitioner claimed to have dispatched goods to a consignee with proper tax invoice and E-way bill. The goods were detained during transportation, and although documents were produced, revenue authorities doubted the genuineness of the consignee. The petitioner argued that security may be demanded under Section 129(1)(a) of the Act, not under Section 129(1)(b) citing relevant circulars and previous court decisions.

The revenue authorities raised discrepancies in the transaction and mentioned the suspension of the petitioner's registration. However, upon inquiry, it was found that the revenue had not formed an opinion to falsify the genuineness of the documents produced by the petitioner. The petitioner claimed ownership of the goods and was willing to pay security under Section 129(1)(a) of the Act. The court referred to previous decisions where penalty under Section 129(1)(b) was set aside when the consignors were registered dealers and the owner of the goods came forward for payment of penalty.

The court agreed with the previous decisions and allowed the writ petition. The impugned order demanding penalty under Section 129(1)(b) was set aside, and the matter was remitted back to the respondent to pass a fresh order considering the petitioner eligible for the benefit of Section 129(1)(a) of the Act.