2025 (2) TMI 881 - HC - GST

Detention of goods - levy of penalty - failure to accompany e-tax invoice with the goods - intent to evade - HELD THAT - It is not in dispute that the goods in question were accompanying with tax invoice e-way bill bilty etc. in which no adverse inference regarding the description of goods and the quantity of goods was ever drawn at any stage. The only ground for seizure of the goods and penalty was that the e-tax invoice was not accompanying the goods in question. The petitioner submitted its reply specifically mentioning that due to technical glitch in the GST portal the same could not be generated. The said fact has not been disputed by any of the authorities. Even before this Court the said ground has been taken but the same has not been specifically denied. Further the record shows that none of the authorities below have recorded any finding that the petitioner has intention to evade payment of tax. This Court in Shyam Sel Power Limited 2023 (10) TMI 218 - ALLAHABAD HIGH COURT and Galaxy Enterprises 2023 (11) TMI 359 - ALLAHABAD HIGH COURT has specifically held that in case any deficiency is pointed out in the show cause notice and the same is cured before passing of the detention order no penalty can be justified. Conclusion - The detention and penalties imposed on the petitioner for not accompanying the e-tax invoice were not justified under the law. The impugned order is set aside - petition allowed.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the detention and penalty imposed on the petitioner for not accompanying the e-tax invoice with the goods were justified under the GST Act?2. Whether the petitioner had the intention to evade tax and whether the authorities had the right to seize the goods and impose penalties based on the absence of the e-tax invoice?3. Whether the Ministry of Finance's notification regarding the necessity of specified documents with consignments of goods applies to the present case?Issue-Wise Detailed Analysis:1. Relevant legal framework and precedents: - The Goods and Services Tax (GST) Act, specifically Section 129, allows for the detention and seizure of goods if certain requirements are not met. - Precedents from the High Court, such as Shyam Sel & Power Limited Vs. State of U.P. and Galaxy Enterprises Vs. State of U.P., provide guidance on the necessity of curing deficiencies before imposing penalties.2. Court's interpretation and reasoning: - The Court noted that the goods in question were accompanied by necessary documents like tax invoice, e-way bill, and bilty, with no issues regarding the goods' description or quantity. - The primary ground for detention and penalty was the absence of the e-tax invoice, which the petitioner explained was due to a technical glitch in the GST portal. - The Court highlighted that none of the authorities found evidence of the petitioner's intention to evade tax.3. Key evidence and findings: - The petitioner's submission regarding the technical glitch in generating the e-tax invoice was accepted by the Court. - The authorities did not dispute the petitioner's explanation or find any evidence of tax evasion.4. Application of law to facts: - The Court applied the legal principles established in previous cases, emphasizing that if deficiencies are rectified before the detention order, penalties cannot be justified. - In this case, since the deficiency in the e-tax invoice was due to a technical issue and was rectified before the detention order, the seizure of goods and imposed penalties were deemed unjustified.5. Conclusions: - The impugned orders passed by the authorities imposing penalties on the petitioner were quashed. - The Court directed the refund of the amount deposited by the petitioner within two months of the order.Significant Holdings:- The Court held that the detention and penalties imposed on the petitioner for not accompanying the e-tax invoice were not justified under the law.- The judgment reaffirmed the principle that if deficiencies are rectified before the detention order, penalties cannot be upheld.In conclusion, the Court ruled in favor of the petitioner, quashing the impugned orders and directing the refund of the deposited amount. The judgment emphasized the importance of rectifying deficiencies before imposing penalties and upheld the petitioner's explanation regarding the technical glitch in generating the e-tax invoice.