2023 (10) TMI 635 - HC - GST

Levy of penalty - non availability of the delivery challan with the vehicles - order passed without appreciating the fact that the petitioner had already ensured all the compliances under CGST Act - HELD THAT - Admittedly, the petitioner had generated e-way bills pertaining to both the vehicles. The vehicles were carrying invoices, e-way bills and bilty. It is not a case of tax evasion. All the dues had already been paid, including the tax. Documents have been referred to by the learned counsel for the petitioner to indicate that after tax had been paid, on the direction of SAIL, the goods were handed over to the petitioner at Kanpur. A bare reading of Section 129 of the Act, prior to the amendment dated 01.01.2022 indicates that essentially it had an element of tax also because sub (a) to sub-Section (1) to Section 129 of the Act, speaks of release of a vehicle on payment of applicable tax and penalty. The words applicable tax has now been deleted from this provision. Goods are to be transported alongwith certain documents as specified under the Act. If every non-compliance in respect of the documents that a vehicle should carry may attract the provisions of Section 129 of the Act, what would be those situation in which the provisions of Section 122 of the Act may be invoked? A bare reading of Section 130 of the Act, makes it clear that here what is to be established that (i) there has been non-compliance of the provisions of the Act, which leads to the evasion of the Tax and further the evasion of tax was intentional - initially when Section 129 of the Act was enacted, the legislature had considered that there was some tax element, which was to be addressed before the release of the vehicle. Section 122 of the Act, on the other hand, is simpliciter. Section 122 (xiv) of the Act makes one liable to some penalty if a person transports any taxable goods without the cover of the documents as may be specified in this behalf. It has no tax element. In the instant case, there has been no evasion of tax. There has been no intention to evade tax. Every information was with the GST authorities. Even if the petitioner was not carrying any delivery challan, there was no additional information that could have been provided by virtue of production of delivery challan. E-way bill was properly generated. Tax was properly paid. It was mere non-compliance of the provisions of Section 55 (5) (b) of the Act. This Court is of the view that instead of proceeding under Section 129, the respondents authorities ought to have proceeded under Section 122 of the Act - this Court is of the view that impugned orders are not in accordance with law - Petition allowed.

Summary

Issues Involved:
1. Legality of the penalty imposed under Section 129 of the Central/State Goods and Services Tax, 2017.
2. Compliance with procedural requirements under the 2017 Rules.
3. Application of Section 122 versus Section 129 of the Act.

Summary:

Issue 1: Legality of the Penalty Imposed under Section 129 of the Act

The challenge in these petitions is to the orders dated 09.06.2023 passed by the Assistant Commissioner State Tax/Tax Officer, imposing penalties under Section 129 of the Central/State Goods and Services Tax, 2017. The petitioner argued that the imposed penalty is illegal as it was passed without appreciating that the petitioner had ensured all compliances under the Act except the delivery challan. The petitioner contended that the non-availability of the delivery challan is a mere procedural impropriety or irregularity without any element of tax evasion. The court noted that the facts are admitted and there is no dispute regarding the tax payment.

Issue 2: Compliance with Procedural Requirements under the 2017 Rules

The petitioner had generated e-way bills and was carrying invoices and bilty. The vehicles were intercepted for not carrying delivery challans as required under Rule 55 (5) (b) of the 2017 Rules. The court observed that the delivery challan does not contain any additional information that was not already available in the other documents. The court emphasized that the statutory provisions should be interpreted harmoniously to avoid conflicts and give effect to all provisions.

Issue 3: Application of Section 122 versus Section 129 of the Act

The court examined whether the situation warranted invoking Section 129 of the Act. It was noted that Section 129, prior to its amendment, included an element of tax, which has now been removed. The court reasoned that not every non-compliance with document requirements should attract Section 129. Instead, Section 122, which deals with penalties for transporting goods without specified documents, should be applicable in cases of mere non-compliance without tax evasion or fraudulent intent. The court referred to Circular 94, which suggests that minor breaches should be addressed under Section 126 of the Act.

Conclusion:

The court concluded that the impugned orders under Section 129 were not in accordance with the law and should be set aside. The GST authorities were directed to refund the amount deposited by the petitioner and were given the liberty to proceed under Section 122 of the Act if deemed necessary. The writ petitions were allowed, and the orders dated 09.06.2023 were set aside.