2023 (10) TMI 416 - HC - GST

Penalty order under section 129(1) of the UPGST Act - confiscation of goods - at the time of interception of the goods were inside or outside the railway station? - HELD THAT - Against the order passed under section 129(3) of the SGST Act, an appeal was preferred before the Additional Commissioner, but by the impugned order, a fact has been noticed at internal page no. 4 that the owner of the goods, along with documents, were inside the railway station for getting the Railway Receipt as the number of the Railway Receipt is to be mentioned in the e-way bill, Part B. Once this fact was brought, from the date of interception till the passing of the impugned order, not a word has been whispered by either of the authorities below that there was any intention of the petitioner to evade payment of tax. It is also not in dispute that the petitioner, after getting the knowledge of the goods being intercepted and confiscated before passing the seizure order, has informed the authorities about the attending circumstances, but without considering the same, the impugned order under section 129(3) of the SGST Act has been passed. This Court in the case of M/S SHYAM SEL AND POWER LIMITED VERSUS STATE OF U.P. AND 2 OTHERS 2023 (10) TMI 218 - ALLAHABAD HIGH COURT has held 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. The Punjab Haryana High Court, in M/S RAGHAV METALS VERSUS STATE OF HARYANA AND OTHERS 2022 (3) TMI 682 - PUNJAB HARYANA HIGH COURT has held Keeping in view these circumstances, it cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. In view of the facts circumstances stated above as well as the law laid down by the Apex Court as well as this Court, the impugned orders cannot be sustained in the eyes of law - impugned order passed by the respondent no. 2 as well as the impugned order passed by the respondent no. 3 are hereby quashed - The writ petition is allowed with a cost of Rs. 1,000/-, which shall be paid to the petitioners by the respondents Authorities within a period of 15 days from today.

Summary

Issues Involved:

1. Constitution of GST Tribunal in Uttar Pradesh.
2. Validity of Penalty Order under Section 129(1) of the UPGST Act.
3. Intention to Evade Tax.
4. Refund of Penalty Amount with Interest.

Summary:

1. Constitution of GST Tribunal in Uttar Pradesh:
The writ petition was entertained due to the absence of a constituted GST Tribunal in Uttar Pradesh as per the Central Government notification dated 14.09.2023.

2. Validity of Penalty Order under Section 129(1) of the UPGST Act:
The petitioner challenged the penalty order dated 25.11.2022 and the subsequent appeal rejection on 24.03.2023. The penalty was imposed following the interception and confiscation of goods on 18.11.2022 outside the railway station. The petitioner argued that the e-way bill could not be generated due to a technical glitch and that the goods were detained without waiting for the necessary documents to be produced.

3. Intention to Evade Tax:
The petitioner contended there was no intention to evade tax, as evidenced by the immediate attempt to show documents and the detailed reply provided. The authorities did not consider these facts and imposed the penalty without any observation of intent to evade tax. The court noted that the authorities failed to cross-check the petitioner's claim that the owner was arranging the Railway Receipt for generating the e-way bill.

4. Refund of Penalty Amount with Interest:
The court referenced several judgments, including those from the Apex Court and Division Bench, indicating that intent to evade tax is mandatory for imposing penalties under Section 129. The court found that the authorities did not establish such intent and thus, the penalty proceedings were inappropriate. Consequently, the impugned orders were quashed.

Conclusion:
The writ petition was allowed, quashing the impugned orders dated 25.11.2022 and 24.03.2023. The court ordered the respondents to refund the penalty amount within 15 days, failing which interest at 9% per annum would apply. Additionally, a cost of Rs. 1,000 was imposed on the respondents, to be recovered from the erring officer. The matter was listed for compliance after a month.