2024 (7) TMI 44 - HC - GST

Validity of impugned SCN and impugned assessment order - levy of penalty upon the petitioner u/s 129 of the CGST Act - non-updation of the e-way bill - Goods were transferred / shifted to another vehicle - HELD THAT - The material on record does not disclose that there was any intention on the part of the petitioner to either contravene the provisions of the CGST Act or avoid / evade payment of tax and on account of non-extension of the validity of the e-way bill by the petitioner due to breakdown of the vehicle, no presumption or inference can be drawn against the petitioner as regards its intent to avoid / evade payment of tax. Consequently, the facts of the instant case make it just and proper to impose general penalty of Rs. 25,000/- on the petitioner by invoking Section 125 of the CGST Act by setting aside the impugned order and notice and by directing the respondents to refund the tax paid by the petitioner by deducting Rs. 25,000/- from the said amount. The impugned Notice and the impugned order are hereby set aside - it is deemed just and proper to invoke Section 125 of CGST Act and impose maximum penalty of Rs. 25,000/- on the petitioner - petition allowed.

Summary

Issues:
Petition seeking quashing of show cause notice and assessment order, validity of e-way bill, imposition of penalty under Section 129 of CGST Act, justification for non-updation of e-way bill, intention to evade tax, refund of penalty, reliance on judgment in Assistant Commissioner vs. Satyam Shivam Papers Pvt. Ltd.

Analysis:
The petitioner sought to quash the show cause notice and assessment order due to a breakdown of the subject vehicle during transit, leading to a delay in reaching the destination and expiration of the e-way bill. The petitioner argued that the non-updation of the e-way bill was unintentional and beyond its control, emphasizing no intent to evade tax. The petitioner requested the imposition of a maximum general penalty of Rs. 25,000 under Section 125 of the CGST Act and sought a refund of the penalty paid, citing the judgment in Assistant Commissioner vs. Satyam Shivam Papers Pvt. Ltd. The respondents opposed the petition.

The court examined the circumstances and concluded that the breakdown of the vehicle and the subsequent delay were not intentional or attributable to the petitioner. It found no evidence of intent to contravene CGST Act provisions or evade tax. Therefore, it deemed fit to impose a general penalty of Rs. 25,000 under Section 125 of the CGST Act, setting aside the impugned order and notice, and directing the refund of excess penalty paid by the petitioner within a month.

In a related judgment, the court referenced a case involving similar issues where the High Court set aside the tax and penalty while enhancing the costs imposed on the responsible party. The court emphasized that no intent to evade tax was found and criticized the abuse of power in collecting tax and penalty. It upheld the High Court's decision and enhanced the costs imposed in the matter, clarifying that the State could recover the costs from the responsible parties directly.

Ultimately, the court allowed the petition, setting aside the impugned notice and order, imposing a penalty of Rs. 25,000 on the petitioner, and directing the refund of excess penalty paid. The judgment highlighted the importance of considering intent and circumstances in tax-related matters and emphasized the need to prevent unnecessary litigation and abuse of power in tax collection processes.