2024 (8) TMI 446 - HC - GST

Breach of principles of natural justice - levy of penalty on the consignee of the goods - no opportunity of hearing provided, before levy of penalty - HELD THAT - The tax invoice is on record. This document clearly shows that the invoice was raised on Bill To Ship To basis. The particulars of the consignee, i.e., the petitioner, are set out therein. The notices issued at the time of detention in Form GST MOV-01 and MOV-02 do not contain the name of the petitioner. It appears that these notices were served on the driver of the vehicle and the notices contained the names of the supplier and purchaser. By contrast, the impugned order has been issued to the petitioner without any prior opportunity to the petitioner to respond thereto or contest the matter. This clearly constitutes breach of principles of natural justice. For such reason, the impugned order is not sustainable. The impugned order dated 27.05.2024 is set aside by leaving it open to the respondents to initiate fresh proceedings in accordance with law - petition disposed off.

Summary

Issues Involved:
Challenge to order on breach of principles of natural justice in relation to GST penalty imposition on consignee without prior opportunity.

Detailed Analysis:

1. Background and Facts:
The petitioner, a subsidiary of a company specializing in bio-CNG production, faced a penalty imposition under GST laws due to the interception of goods while being transported from Gujarat to Chennai. The goods were procured by an entity called CEID from Power Hydrotech, with the petitioner listed as the consignee on the tax invoice.

2. Petitioner's Contentions:
The petitioner argued that the impugned order was issued without providing any prior opportunity to respond, which constitutes a breach of principles of natural justice. Referring to applicable GST statutes, the petitioner contended that penalties cannot be imposed on the consignee and that the invoice for goods should be issued upon delivery to the consignee.

3. Respondent's Argument:
The Additional Government Pleader representing the respondent referred to Section 31 of GST statutes, stating that the invoice should have been issued when the goods were transported from the seller to the buyer. As the goods were transported directly to the petitioner, the invoice should have accompanied the goods.

4. Court's Findings and Decision:
The court observed that the tax invoice was raised on a "Bill To Ship To" basis, clearly specifying the petitioner as the consignee. However, the notices issued at the time of detention did not contain the petitioner's name, leading to a breach of natural justice in issuing the impugned order directly to the petitioner without prior opportunity.

5. Order and Relief Granted:
The court set aside the impugned order dated 27.05.2024, allowing the respondents to initiate fresh proceedings in accordance with the law. The petitioner was permitted to execute a bank guarantee as per Section 129(1)(c) of GST enactments for the provisional release of goods. The bank guarantee was required to be maintained for one month after the conclusion of fresh proceedings, with a restraint on invoking it until then.

6. Conclusion:
The Writ Petition was disposed of with no order as to costs, and connected miscellaneous petitions were closed accordingly. The judgment emphasized the importance of adhering to principles of natural justice and proper procedures in imposing penalties under GST laws, ensuring fairness and due process for all parties involved.