2022 (10) TMI 999 - HC - GST

Release of detained goods - Petitioner / Revenue had received intelligence that the goods are being transported twice over on the same set of invoices - Section 129 (3) of the CGST Act - HELD THAT - The plain reading of the provisions of CGST Act makes it clear that the provisions as contained in Chapter 19 including Section 129 are the provisions for release of goods intercepted during transportation on the ground as engrafted therein and provides an opportunity to the assessee to take the benefit and to come forward for release of the goods on payment of the amounts as indicated in Section 129 (1)(a)(b) and (c) as the case may be. The quantum of penalty which is to be paid under Section 129 (1)(a)(b) and (c) is to be determined under Section 129(3) of the CGST Act. The said power is purely an alternate mode given to the assessees to come forward and to avoid any future litigation and to offer and pay the amount. If the assessee does not avail the benefit as accrue from Section 129, the department is clearly free to take recourse under Chapter 15 read with Section 122 of the CGST Act to take steps for determining the tax due liability and the penalty. In the present case, as the respondent has not approached for availing the benefit that flow from Section 129, coupled with the fact that the appellate authority found that the basis for initiating proceedings were non-existent, there are no reason to interfere with the order passed by the appellate authority, in exercise of powers under Section 226 of the Constitution of India - petition dismissed.

Summary

Issues:
Challenge to order setting aside tax and penalty under Section 129(3) of the CGST Act based on intercepted goods transported on pre-used tax invoices.

Analysis:
The case involves a challenge to an order passed by the appellate authority setting aside the demand of tax and penalty imposed under Section 129(3) of the CGST Act. The goods being transported by the respondent were intercepted based on intelligence that they were being transported on pre-used tax invoices. The authorities passed an order directing the respondent to pay tax and cess on the goods. The appellate authority set aside this order, stating that there was no material for detention and seizure of the goods under Section 129. The appellate authority emphasized that the levy of tax and penalty cannot be based on presumption alone.

The petitioner argued that the goods were being transported twice over on the same set of invoices, but the court found this argument not acceptable. The court highlighted that goods must be accompanied by E-way bills as per Section 138 of the CGST Act rules, which was not considered in the assessment order. The court noted that the provisions in Chapter 19, including Section 129, provide for the release of intercepted goods during transportation, giving the assessee an opportunity to pay the required amounts for release. The power under Section 129(3) determines the penalty to be paid, offering an alternate mode for assessees to avoid future litigation by paying the amount.

Since the respondent did not avail the benefit under Section 129 and the appellate authority found the basis for proceedings to be non-existent, the court declined to interfere with the appellate authority's order. The court emphasized that if the assessee does not utilize the benefits under Section 129, the department can take steps under Chapter 15 and Section 122 of the CGST Act to determine tax liability and penalty. Consequently, the writ petition was dismissed, and the interim order was vacated.