2025 (1) TMI 1145 - HC - GST

Challenge to order of declination to grant any interim order but directing affidavits to be exchanged - whether the appellate authority viz. the Senior Joint Commissioner of Revenue Bally Circle was justified in dismissing the assessees appeal by an order confirming the order of penalty imposed on the appellants under Section 129 (1) of the G.S.T. Act 2017? - HELD THAT - It is not clear as to how the adjudicating authority and the appellate authority had invoked Section 129 of the Act since the facts of the present case shows there appears to have been no intention to evade the payment of tax. The only reason for imposing the penalty is that in the e-way bill generated by the appellants in favour of M/s. CRM Ispat Private Limited dated 8th July 2023 for outward supply the despatch was shown to be made from Durgapur West Bengal Pin 713212. The authorities are of the opinion that the full details of the company which despatched the goods which were sent to the appellants/customer was not disclosed. However on a comparison of the e-way bill raised on 6th July 2023 alongwith the tax invoice raised by the appellants show that the goods moved in the same vehicle bearing registration No. W.B. 41D 1508. In any event the e-way bill is generated based on an application made in the portal and in Part A of the e-way bill one of the details is to be furnished is place of despatch in which the appellants had mentioned as West Bengal 713212 and this detail which was disclosed while making the application was accepted and the e-way bill stood generated. Therefore merely because the appellants did not disclose the name of the company and the full particulars of his supplier cannot be stated to be a ground that the appellants had intention to evade the payment of tax. In the peculiar facts and circumstances of the case the power under Section 129 (1) (a) of the Act could not have been invoked. Conclusion - The mere omission of certain details in an e-way bill when justified by common trade practices does not automatically imply an intention to evade tax. The penalty imposed under Section 129(1) was unjustified. The order passed by the appellate authority as well as the original authority are set aside and the appellants are entitled to apply for refund of the penalty which was remitted by them without prejudice to their rights and contentions and if such application is filed the same shall be dealt with in accordance with law - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issue in this judgment is whether the appellate authority, specifically the Senior Joint Commissioner of Revenue, Bally Circle, was justified in dismissing the appellants' appeal and confirming the penalty imposed under Section 129(1) of the G.S.T. Act, 2017. The case examines the validity of the penalty in light of the appellants' alleged intention to evade tax based on the information provided in the e-way bill.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The primary legal framework involved is Section 129(1) of the G.S.T. Act, 2017, which deals with the detention, seizure, and release of goods and conveyances in transit. This provision is typically invoked when there is an intention to evade tax.

Court's interpretation and reasoning:

The court questioned the applicability of Section 129 in this case, given the lack of clear evidence indicating an intention to evade tax. The court noted that the appellants had provided a plausible explanation for the discrepancy in the e-way bill, which was a common trade practice aimed at protecting supplier confidentiality.

Key evidence and findings:

The key evidence considered was the e-way bill generated by the appellants and the accompanying tax invoice. Both documents showed that the goods were transported in the same vehicle. The appellants argued that the e-way bill only mentioned the place of dispatch (West Bengal, 713212) without full supplier details to maintain confidentiality, which is a recognized trade practice.

Application of law to facts:

The court applied the legal standard under Section 129(1) and found that the facts did not support the invocation of this provision. The court emphasized that the mere omission of supplier details in the e-way bill, when explained as a trade practice, did not constitute an intention to evade tax.

Treatment of competing arguments:

The court considered the authorities' argument that the omission of full supplier details indicated tax evasion intent. However, it found the appellants' explanation credible and consistent with trade practices, thus rejecting the authorities' position.

Conclusions:

The court concluded that the invocation of Section 129(1) was inappropriate in this case. The penalty imposed by the original and appellate authorities was set aside, and the appellants were entitled to apply for a refund of the penalty paid.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

"It is not clear as to how the adjudicating authority and the appellate authority had invoked Section 129 of the Act since, the facts of the present case shows there appears to have been no intention to evade the payment of tax."

Core principles established:

The judgment establishes that the mere omission of certain details in an e-way bill, when justified by common trade practices, does not automatically imply an intention to evade tax. The authorities must demonstrate clear intent to evade tax to justify penalties under Section 129(1).

Final determinations on each issue:

The court determined that the penalty imposed under Section 129(1) was unjustified and set aside the orders of both the original and appellate authorities. The appellants were granted the right to seek a refund of the penalty paid.