2024 (3) TMI 1160 - HC - GST

Seeking release of goods in terms of the provision of Section 129(1)(a) of the U.P.G.S.T. Act 2017 - SCN issued to the petitioner in its capacity as the consignee - HELD THAT - The transaction disclosed to the revenue authorities was one of job work return to the petitioner (a registered dealer in the State of Haryana) from a dealer in Daurala. The goods were intercepted during movement through the State of Uttar Pradesh - Penalty order has also been passed against the petitioner in its capacity as the consignee. The case of the revenue is that the petitioner has also prepared delivery challan of job worker and therefore, the penalty has been rightly imposed. At the same time, upon query made, learned counsel for the revenue fairly states, no person other than the petitioner has claimed the goods. Undoubtedly, under Section 129 of UPGST Act, 2017, different rates of penalties are prescribed depending upon the status of the person viz-a-viz, the goods that may have been seized. Again, undoubtedly the owner of the goods may not be visited with penalty exceeding 200 percent of the tax leviable on the offending goods. Learned counsel for the petitioner last submits that the goods may be made over to the petitioner subject to its complying Section 129 (1)(a) of UPGST Act, 2017 with liberty to appeal against the penalty order. The writ petition succeeds and is allowed at this stage itself to the extent, petitioner is permitted to obtain release of goods against furnishing security equal to 200 percent of the tax imposable on the goods.

Summary

Issues involved: Release of goods under Section 129(1)(a) of U.P.G.S.T. Act 2017, imposition of penalty on consignee, interpretation of penalty provisions under Section 129 of UPGST Act 2017, consideration of circular issued by Commissioner dated 31.12.2018.

Release of Goods under Section 129(1)(a) of U.P.G.S.T. Act 2017:
The petitioner, a registered person and owner of the goods, sought release of goods under Section 129(1)(a) of the U.P.G.S.T. Act 2017, which mandates that goods are liable to be released in favor of the owner. The Court acknowledged that the petitioner is entitled to obtain release of the goods without prejudice to contesting the penalty proceedings.

Imposition of Penalty on Consignee:
The petitioner, as the consignee of the goods involved in a job work return transaction, was issued a show cause notice and a penalty order by revenue authorities. The penalty was imposed on the petitioner for allegedly preparing a delivery challan of the job worker. Despite the penalty, no other person besides the petitioner claimed the goods. The Court noted that different penalty rates are prescribed under Section 129 of UPGST Act 2017 based on the status of the person in relation to the seized goods.

Interpretation of Penalty Provisions under Section 129 of UPGST Act 2017:
The Court considered the provisions of Section 129 of UPGST Act 2017, which limit the penalty on the owner of goods to not exceed 200 percent of the tax leviable on the goods. Additionally, a circular issued by the Commissioner on 31.12.2018 reiterated the same limitation on penalties. The Court referred to previous decisions, such as H/S Halder Enterprises Vs. State of U.P., to support its interpretation of the penalty provisions.

Consideration of Circular Issued by Commissioner:
The circular issued by the Commissioner on 31.12.2018 aligns with the provisions of law regarding the imposition of penalties under Section 129 of UPGST Act 2017. The Court noted that the circular and legal provisions have been previously analyzed in decisions such as H/S Halder Enterprises Vs. State of U.P.

Conclusion:
The writ petition succeeded, allowing the petitioner to obtain the release of goods by furnishing security equal to 200 percent of the tax imposable on the goods. The petitioner was granted the liberty to appeal against the penalty order dated 30.12.2023. The Court's decision enabled the petitioner to secure the release of goods while preserving the right to challenge the penalty imposed.