2023 (11) TMI 94 - HC - GST

Violation of principles of natural justice - opportunity of hearing not provided - Penalty order - weight mentioned in the e-way bill was higher than the actual weight - intent to evade tax present or not - HELD THAT - After detaining the goods, show cause notice was issued. Before the seizure order could be passed, the correct e-way bill was produced cancelling the earlier e-way bill. This Court, on various occasions, has held that if, after issuance of show cause notice and before passing the seizure order, documents are produced, no adverse inference can be drawn, but in the case in hand, the petitioner has issued two bills of the same number with correct weight and the same was produced before the authorities below. On the said premise, the penalty and seizure order was not passed, but while rejecting the appeal, an adverse inference has been drawn that the petitioner has issued two tax invoices of the same number. Once the authorities intend to take an adverse view, the petitioner has to be informed and put to notice to rebut the same and therefore, the impugned order cannot be sustained in the eyes of law - In the instant case, the petitioner was not put to any notice or opportunity being afforded to bring material on record to contest its case, which is in clear violation of the principles of natural justice. The matter is remanded back to to the Additional Commissioner for deciding the issue afresh after giving full opportunity of hearing to all the stake holders in accordance with law, preferably, within a period of three months from the date of production of a certified copy of this order - petition allowed by way of remand.

Summary

Issues involved: Constitution of GST Tribunal in Uttar Pradesh, Challenge against penalty and seizure orders based on incorrect weight mentioned in e-way bill.

Constitution of GST Tribunal in Uttar Pradesh:
The High Court entertained the Writ Petitions due to the absence of a GST Tribunal in Uttar Pradesh as per the notification of the Central Government. The issues in both petitions were similar, hence decided by a common order.

Challenge against penalty and seizure orders:
The petitioner, a Proprietorship concern, challenged penalty orders imposed for incorrect weight mentioned in the e-way bill during the transit of goods. The petitioner claimed that the mistake in weight was rectified before the movement of goods, and correct documents were produced before detention. The Additional Chief Standing Counsel argued that the petitioner generated a new tax invoice with corrected weight after detention, indicating an intention to evade tax.

The Court observed discrepancies in the weight mentioned in the e-way bill compared to the actual weight during interception. It emphasized that no adverse inference could be drawn if the e-way bill showed more weight than the actual. The Court also noted that producing correct documents before the seizure order is passed should not lead to adverse inferences, as done by the authorities in this case.

The Court found that while rejecting the appeal, an adverse inference was made without giving the petitioner an opportunity to rebut. It held that the principles of natural justice were violated as the petitioner was not informed or given a chance to contest the adverse view. Consequently, the penalty and seizure orders were quashed and deemed unsustainable in the eyes of the law.

The writ petitions were allowed, and the matter was remanded back to the Additional Commissioner for a fresh decision after providing a full opportunity for all stakeholders to be heard, in compliance with the law, within three months from the date of the order. The petitioner was directed to serve a certified copy of the order within three weeks.