2023 (7) TMI 1291 - HC - GST

Levy of penalty upon the petitioner by not treating the petitioner to be the owner of goods - seeking release of seized goods - intent to evade or not - it is contended that the petitioner is the owner of the goods and is ready and willing to deposit penalty under protest under Section 129(1) (a) to get the goods released - perishable goods - HELD THAT - Strong reliance has been placed upon the decision of this Court in M/s Sahil Traders Vs. State of U.P. 2023 (6) TMI 360 - ALLAHABAD HIGH COURT which applies squarely to the case at hand. Sri Ankur Agarwal, learned counsel representing the revenue has vehemently opposed the writ petition by submitting that the petitioner has rightly been held not the owner of the goods and the penalty has rightly been imposed upon the petitioner under Section 129(1) (b). He, however, could not dispute the fact that intention to evade tax is a per-requisite for imposition of penalty under Section 129 of the Act. The E-way Bills being the documents of title to the goods were accompanying the goods hence, the conclusion of the revenue that the petitioner was not the owner of the goods is patently erroneous. Consequently, the penalty proceedings were liable to be initiated under Section 129(1)(a) and not 129(1)(b) as has been done in the present case. Thus, expressing full agreement with the view expressed by the Coordinate Bench of this Court in the case of M/s Sahil Traders, the impugned penalty order is set aside - The Respondent No.2 is directed to pass fresh order treating the petitioner to be eligible to the benefit of Section 129(1) (a) of the Act. The writ petition is allowed.

Summary

Issues Involved:
The judgment deals with the penalty order passed under Section 129(1)(b) of the Goods and Services Tax Act, 2017, regarding the ownership of goods during transit and the imposition of penalty for alleged tax evasion.

Ownership of Goods Issue:
The writ petition challenged a penalty order imposed on the petitioner for not being considered the owner of goods in transit, despite having necessary documents like tax invoice, e-way bill, and bilty issued in the petitioner's name as the consignor. The petitioner argued that there was no intention to evade tax, and due to the perishable nature of the goods, they were willing to deposit the penalty under protest. The petitioner relied on a previous court decision that applied directly to the case. The revenue representative opposed the petition, maintaining that the penalty was rightly imposed, but acknowledged that intent to evade tax is essential for such penalties. The court found that the E-way Bills, as title documents, accompanied the goods, indicating ownership by the petitioner. Consequently, the court set aside the penalty order under Section 129(1)(b) and directed a fresh order under Section 129(1)(a) in favor of the petitioner.

Assessment Order Issue:
The counsel for the petitioner mentioned that Respondent No.2 had already passed an assessment order granting the petitioner benefits under Section 129(1)(a). The court granted the petitioner the liberty to challenge this assessment order through available legal remedies.

In conclusion, the High Court of Allahabad set aside the penalty order against the petitioner and directed a fresh order granting the petitioner benefits under Section 129(1)(a) of the Goods and Services Tax Act, 2017. The petitioner was also allowed to challenge the assessment order if desired.