2024 (12) TMI 584 - HC - GST

Rejection of claim of the ownership of the petitioner on the goods detained by respondent no. 5 - petitioner has failed to produce evidence regarding ownership of the goods - Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 - HELD THAT - The denial of the respondents to apply the provisions of Section 129(1)(a) of the Act, in the light of the Clarification dated 31.12.2018 and judgments of this Court, is based on the finding that the petitioner has failed to produce evidence regarding ownership of the goods. A perusal of the finding recorded would reveal that the authority observed that only consignor or consignee, whose name is indicated in the invoice and e-way bills, can be deemed as owner of the goods, however the invoices and e-way bills indicate the consignee as M/s Vishal Enterprise and that no material has been produced by Mr. Vishal Chobia pertaining to the ownership of the goods based on Aadhar Card, Pan Card etc. as his name is not indicated in the invoice/ e-way bills. The finding recorded is essentially de-hors the material available with the authority wherein the registration certificate pertaining to the GISTIN clearly indicates the status of the petitioner as proprietor of M/s. Vishal Enterprise - In view of the specific indications in the official records about M/s. Vishal Enterprise, being the proprietorship of the petitioner, turning a blind eye by the officers to the said aspect and refusing to recognize the petitioner as deemed owner of the goods being the consignee cannot be sustained. The impugned orders of penalty dated 05.11.2024 (Annexure-1) passed by respondent no. 5, are set aside. The matter is remanded back to the competent authority to pass a fresh order in terms of the observations made hereinbefore and in terms of the provisions of Section 129(1)(a) of the Act, within a period of two weeks from the date of this order - petition allowed by way of remand.

Summary

Issues:
1. Rejection of ownership claim of goods detained under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017.
2. Imposition of penalty under Section 129(1)(b) instead of Section 129(1)(a) based on incorrect findings regarding ownership.
3. Dispute over evidence of ownership of goods and entitlement to relief under Section 129(1)(a) based on the consignee establishment.
4. Interpretation of provisions of Section 129(1)(a) in light of Clarification dated 31.12.2018 and relevant case laws.
5. Failure to produce evidence of ownership leading to denial of relief and imposition of penalty.

Analysis:
The judgment involves writ petitions challenging orders passed under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017, rejecting the petitioner's ownership claim of goods detained by respondent no. 5. The petitioner argued that the penalty imposed under Section 129(1)(b) should have been under Section 129(1)(a) as per a clarification issued by the Central Board for Taxes and Customs. The authority rejected the ownership claim due to discrepancies in the name on the invoice and e-way bills, despite official records indicating the petitioner as the proprietor of the firm. The petitioner contended that the consignee establishment should establish ownership, citing relevant case laws (Halder Enterprises Vs. State of U.P., Margo Brush India Vs. State of U.P., Green India Vs. State of U.P., and Ram India Company Vs. State of U.P.).

The respondents acknowledged the applicability of Section 129(1)(a) as per the clarification and case laws cited by the petitioner. However, they argued that the failure to produce evidence of ownership precluded the petitioner from claiming relief. The court considered the submissions and examined the record, noting that the denial of relief was based on the petitioner's alleged failure to provide evidence of ownership. The authority had emphasized that only the consignor or consignee named in the invoice and e-way bills could be deemed the owner, and since the petitioner's name was not on these documents, ownership was not established.

The court found the authority's reasoning flawed as official records clearly identified the petitioner as the proprietor of the firm, contradicting the finding that ownership evidence was lacking. The court held that the petitioner, as the consignee establishment, should be recognized as the owner of the goods. Consequently, the writ petitions were allowed, the penalty orders were set aside, and the matter was remanded for a fresh order in line with Section 129(1)(a) provisions within two weeks. The judgment underscores the importance of considering official records and legal principles in determining ownership for tax penalty purposes.