2024 (9) TMI 1225 - HC - GST

Levy of penalty u/s 129 of CGST Act - Detention of goods - alleged tax evasion and under-valuation - HELD THAT - The petitioners are permitted to make payment of tax and penalty under Section 129 (1) (a) of the CGST Act 2017, calculated on the market value as determined by the authorities within a period of one week from today. On receipt of the said amounts, the respondent No. 1 is directed to release the vehicle bearing No.MH-40-CM-9089 along with the goods which have been retained by respondent No. 1-authority under the impugned order within a period of seven days thereafter. The Writ Petition is partly allowed.

Summary

Issues:
1. Quashing of orders passed under Section 129 of the GST Act
2. Detention of goods for alleged tax evasion and under-valuation
3. Imposition of penalty on the petitioner
4. Interpretation of Circular GST-11/2018-19 and relevant case law
5. Dispute over the calculation of penalty amount
6. Resolution of the matter by the High Court

Analysis:

The petitioners sought relief from the High Court to quash orders passed under Section 129 of the GST Act, specifically targeting orders related to detention and penalty. The petitioners, a registered entity engaged in trading arecanut, faced detention of goods by authorities during transit to Delhi due to alleged lack of e-way bill and under-valuation. The detention order and penalty were based on these grounds, leading to the petitioners challenging the imposition of penalty as a third party rather than as a consignor as per Circular GST-11/2018-19.

The petitioner's counsel argued, citing a previous court decision, that penalty should be limited to twice the tax amount, not more. The Additional Advocate General contended that penalty should be based on the market value of the goods, which was allegedly undervalued in the invoice. Both parties expressed willingness to settle the penalty issue based on the market value calculation.

Considering the submissions and relevant legal provisions, the High Court partially allowed the writ petition. The court permitted the petitioners to pay the tax and penalty based on the market value determined by authorities within a week. Upon payment, the authorities were directed to release the detained goods and vehicle promptly. Additionally, the court remitted the matter back to the authorities for reconsideration based on the petitioner's reply and ordered that the payment made should not prejudice the rights of either party. The court clarified that its decision did not delve into the merits of the case, emphasizing a neutral stance on the dispute.