2024 (11) TMI 379 - HC - GST

Seizure order under section 129(3) of the GST Act - non-generation of e-way bill leading to penalty and interest imposition - HELD THAT - It is admitted between the parties that the goods in question were transported along with all relevant documents, except e-way bill. It is also not in dispute that the eway bill was produced before the seizure order could be passed. The said fact is evident from the pleading before the authorities below as well as in paragraph nos. 12 13 of the writ petition, which have not been denied in the counter affidavit filed on behalf of the State. The record further shows that no finding has been recorded with the regard to intention to evade legitimate amount of tax. This Court in M/s Falguni Steels 2024 (1) TMI 1150 - ALLAHABAD HIGH COURT has taken the view that even if the e-way bill was not generated at the time of interception of goods, but the same was produced before passed the seizure order as well as in absence of any ground with regard to intention to evade payment of tax, the impugned order cannot be sustained. The impugned order dated 20.11.2020 passed by the respondent no. 5 as well as the impugned order dated 27.07.2021 passed by the respondent no. 4 under section 129(3) of the GST Act cannot be sustained in the eyes of law. The same are hereby quashed - Petition allowed.

Summary

Issues:
Challenge to seizure order under section 129(3) of the GST Act due to non-generation of e-way bill leading to penalty and interest imposition. Dispute over intention to evade tax and validity of seizure order.

Analysis:
The petitioner, a partnership concern registered under the GST Act, challenged the seizure order of goods due to a missing e-way bill, despite all other documents being in order. The petitioner contended that the e-way bill was produced before the seizure order, indicating no intention to evade tax. The petitioner's appeal was dismissed, leading to the writ petition.

The petitioner argued that no discrepancy was found with the goods, and the e-way bill submission before the seizure order should have led to the release of goods. The absence of any finding on tax evasion intention was highlighted, citing precedents like M/s Falguni Steels and M/s Bans Steel judgments to support the argument against penalty imposition without intent to evade tax.

In contrast, the ACSC supported the seizure, alleging that the delayed e-way bill submission showed an intention to evade tax. The court noted that all relevant documents were present with the goods, and the e-way bill was submitted before the seizure order. The absence of a determination on tax evasion intention was crucial, as per the M/s Falguni Steels judgment, which emphasized the need for intent to evade tax for penalty imposition.

The court referenced the M/s Bans Steel case, where the submission of the e-way bill before the seizure order cured any discrepancies, leading to the quashing of the penalty. Based on the facts and legal precedents, the court ruled in favor of the petitioner, quashing the impugned orders under section 129(3) of the GST Act and directing the refund of tax and penalty amounts, if any, deposited by the petitioner.

In conclusion, the judgment highlighted the importance of intent to evade tax for penalty imposition, emphasizing the need for proper documentation and adherence to legal procedures in cases of seizure orders under the GST Act.