2023 (9) TMI 276 - HC - GST

Detention of goods - Arecanut/Betul Nut - genuine documents or not - goods detained on the ground that the goods were not on the regular route but on a different route and the truck driver had given a statement that instead of Robertsganj the goods were to be unloaded at Ghaziabad as well as no document was produced for unloading the goods at Ghaziabad - HELD THAT - In the case in hand during the validity of the first e-way bill the subsequent e-way bill was generated and submitted before the detention authority, i.e. before the expiry of earlier e-way bill, therefore the seizure cannot be justified - Once the authority have recorded the statement given by the truck driver on 30.9.2020 in MOV 01 (annexure 2) that the goods were to be unloaded at Robersganj and then the subsequent statement of the truck driver alleging to unload the goods at Ghaziabad instead of Robersganj cannot be recorded by any stretch of imagination and not permissible in the eye of law without any cojent matrial on record, which shows that perverse action has been taken against the petitioner. Once the owner of the goods has come forward the levy of penalty under section 129(1)(b) of the GST Act cannot be justified as section 129(1)(a) of the GST Act provides that where the owner of the goods come forward for payment of penalty the amount of tax payable should be 200%, whereas in the case in hand the penalty has been levied to the tune of 200% of the value of the goods. In M/S RIYA TRADERS VERSUS STATE OF U.P. AND ANOTHER 2023 (1) TMI 1238 - ALLAHABAD HIGH COURT and in M/S MARGO BRUSH INDIA AND OTHERS VERSUS STATE OF U.P. AND ANOTHER 2023 (1) TMI 1237 - ALLAHABAD HIGH COURT the Division Bench of this Court has held that proceedings under section 129(1)(b) is bad when the owner of the goods comes forward to pay the penalty. The impugned order passed by the respondent no.1 under the provisions of Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 affirming the order dated 21.10.2020 passed by the respondent no.2 cannot be sustained and are hereby set aside - petition allowed.

Summary

Issues Involved:
1. Legality of the detention and seizure of goods.
2. Validity of supplementary notice and additional evidence.
3. Applicability of penalty under Section 129(1)(b) of the GST Act.

Summary:

1. Legality of the Detention and Seizure of Goods:
The petitioner challenged the order dated 19.8.2021 under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner, a registered dealer, had purchased Areca Nuts from a registered dealer in Haryana, and the goods were accompanied by all relevant documents, including a tax invoice and e-way bill. The goods were intercepted and detained on the grounds that they were not on the regular route and the truck driver had stated that the goods were to be unloaded at Ghaziabad instead of Robertsganj. The petitioner argued that no discrepancy was found during the physical verification of the goods and that the detention was unjustified. The court noted that the initial verification did not reveal any discrepancies, and the subsequent detention based on the driver's statement was not permissible without cogent material. The court held that the seizure and detention were unjustified.

2. Validity of Supplementary Notice and Additional Evidence:
The petitioner contended that the supplementary notice issued on 17.10.2020, which alleged that the goods were processed Betul Nut (subject to a higher tax rate), was without any basis or expert report. The court found that no material evidence or expert opinion was provided to support the claim that the goods were different from those disclosed in the accompanying documents. Additionally, the court held that the acceptance of additional evidence by the first appellate authority was in violation of Rule 112 of the GST Rules, as established in previous judgments. The court concluded that the supplementary notice and the acceptance of additional evidence were not justified.

3. Applicability of Penalty under Section 129(1)(b) of the GST Act:
The petitioner argued that once the owner of the goods came forward, the penalty under Section 129(1)(b) could not be invoked, and the penalty should have been limited to 200% of the tax payable under Section 129(1)(a). The court agreed, citing previous judgments that established the same principle. The court held that the imposition of a penalty amounting to 200% of the value of the goods was unjustified and should have been limited to 200% of the tax payable.

Conclusion:
The court set aside the impugned order dated 19.8.2021 and allowed the writ petition with all consequential benefits. Any amount deposited by the petitioner during the litigation was ordered to be returned within two weeks. The case was listed for compliance after two months.