2023 (10) TMI 218 - HC - GST

Levy of penalty - goods were seized as goods for not accompanied by E-way bills - initiation of the proceedings under section 129 of the CGST Act - no genuine documents were accompanying the goods - HELD THAT - Admittedly, the goods in question were coming from West Bengal to Kanpur, along with tax invoice of the petitioner, consignment note of the transporter and e-way bill of the purchaser. Though the e-way bill was cancelled by the purchaser, but it is stated that the same has not been intimated to the petitioner. Once the goods were seized and the petitioner, after inquiring the fact from the purchaser about the attending fact which led to cancellation of e way bill by the purchaser, it was communicated to the respondents, but not being satisfied, the goods were detained and the seizure order was passed. For invoking the proceeding under section 129(3) of the CGST Act, section 130 of the CGST Act was required to be read together, where the intent to evade payment of tax is mandatory, but while issuing notice or while passing the order of detention, seizure or demand of penalty, tax, no such intent of the petitioner was observed. Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach - Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts circumstances of the present case. It is also not in dispute that after release of the goods, the same were sold to P.L. Trading Company. Upon a purposive reading of the sections 129, 130 and 138, it would suffice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act. Petition allowed.

Summary

Issues:
The judgment involves the constitution of GST Tribunal in Uttar Pradesh and challenges against orders imposing penalty under CGST Act.

Constitution of GST Tribunal:
The petitioner filed a writ petition due to the absence of a GST Tribunal in Uttar Pradesh as per the Central Government's notification. The case pertains to challenging orders dated 18.06.2022 and 25.11.2021 passed by the respondents dismissing the appeal and confirming a penalty of Rs. 5,51,602 on the petitioner.

Challenges against Penalty Orders:
The petitioner, engaged in the business of manufacturing steel components, transported goods accompanied by tax invoices, e-way bills, and GRs. The goods were seized due to a canceled e-way bill by the purchasing dealer. The petitioner contended that there was no intention to evade tax and that the penalty should have been levied under a different section of the CGST Act. The appeal was dismissed based on the absence of an e-way bill, violating section 138 of the CGST Act.

Arguments and Submissions:
The petitioner's counsel argued that the penalty should have been imposed under a specific section of the CGST Act and cited a relevant Supreme Court judgment. The Additional Chief Standing Counsel supported the impugned orders, stating that the petitioner failed to provide a genuine e-way bill with the goods, justifying the penalty under section 129 of the CGST Act.

Court's Analysis and Decision:
The Court observed that the petitioner was unaware of the canceled e-way bill by the purchaser and had communicated the circumstances to the authorities. It was noted that no intent to evade tax was observed during the proceedings. The Court highlighted the necessity of intent to evade tax for penalty under sections 129 and 130 of the CGST Act. Referring to relevant legal provisions and precedents, the Court concluded that the penalty should have been imposed under a different section of the Act. Citing previous judgments, the Court quashed the impugned orders dated 18.06.2022 and 25.11.2021.

Conclusion:
In line with legal principles and precedents, the Court allowed the writ petition, quashing the orders imposing penalties on the petitioner. The judgment emphasized the importance of intent to evade tax for penalty under the CGST Act, ultimately ruling in favor of the petitioner.