2024 (11) TMI 337 - HC - GST

Demand of penalty order under the provisions of CGST/ IGST Act and Rules - HELD THAT - The denial by the respondents to apply provisions of Section 129(1)(a) of the Act in light of the clarification dated 31.12.2018 and judgments of this Court are based on the finding as indicated by the authority in Para-4 of its order. A perusal thereof indicates that the said finding essentially is factual and only based on the communication received from the CGST, Delhi regarding the initiation of cancellation proceedings. However, apparently, nothing was available on record of Respondent No.2 to indicate as to whether at all proceedings in this regard were initiated by the authority at Delhi. Further the GSTIN status produced by the petitioner indicates a status different form what is being claimed by the authority at Delhi wherein return has been filed on 20.10.2024 by the petitioner. The impugned demand of penalty order dated 27.09.2024 (Annexure-1) passed by Respondent No.2 is set aside. The writ petition is allowed. The matter is remanded back to the competent authority to pass a fresh order - Petition allowed by way of remand.

Summary

Issues:
1. Impugned demand of penalty order under CGST/IGST Act and Rules.
2. Imposition of penalty under Section 129(1)(b) instead of Section 129(1)(a).
3. Factual correctness of the indication regarding the existence of the firm and initiation of cancellation proceedings.
4. Dispute over the application of clarification dated 31.12.2018 and previous judgments.
5. Validity of the denial to apply provisions of Section 129(1)(a) based on factual findings.
6. Review of material on record and setting aside the penalty order.

Analysis:
The writ petition was filed challenging the penalty order imposed under the CGST/IGST Act and Rules. The petitioner contended that the penalty should have been levied under Section 129(1)(a) instead of Section 129(1)(b) as per a clarification issued by the Central Board of Taxes and Customs GST Policy Wing. The authority based its decision on a communication indicating the firm's non-existence and initiation of cancellation proceedings. However, the petitioner argued that this was factually incorrect as evidenced by the timely filing of returns and GSTIN status report (Annexure-2) showing consistent filing. Reference was made to previous court judgments supporting the petitioner's position (Para 2-4).

The respondents did not dispute the applicability of Section 129(1)(a) based on the clarification and previous judgments but argued that the finding of the firm's non-existence precluded this plea. The court examined the submissions and the material on record, noting that the authority's finding was solely based on the communication from CGST, Delhi, without concrete evidence of cancellation proceedings initiation. The GSTIN status provided by the petitioner contradicted the authority's claim, showing timely return filing. Consequently, the court held that the denial to apply the clarification and previous judgments was unsustainable (Para 5-8).

Considering the factual discrepancies and lack of concrete evidence supporting the penalty order, the court set aside the impugned penalty order and remanded the matter to the competent authority for a fresh decision within two months. The judgment emphasized the importance of factual accuracy and proper application of legal provisions in penalty imposition under the GST laws (Para 9).