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TMI Blog2022 (10) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... h penalty as has been determined, the entire action of determining the tax and penalty under section 129(1) as has been done by means of the impugned order and upheld in the appellate proceedings, impugned before this Court, there are no hesitation in holding that the order passed on 17.10.2018 and as upheld by the order dated 31.10.2020 are not legally substitutable and are accordingly set aside. The amount paid by the petitioner for release of the goods shall be refunded to the petitioner with all expedition preferably within a period of two months from today - the writ petition is allowed. - Writ - C No. - 6620 of 2021 - - - Dated:- 19-10-2022 - Hon'ble Pankaj Bhatia, J. For the Petitioner : Manju Lata Mishra,Ashish Mishra For the Respondent : C.S.C. ORDER HON'BLE PANKAJ BHATIA, J. 1. Supplementary Affidavit filed by the petitioner is taken on record. 2. Heard Sri Ashish Mishra, the counsel for the petitioner and the learned Standing Counsel, who appears for the respondents. 3. The present petition has been filed challenging the order dated 17.10.2018 purportedly to be passed in exercise of the power under Section 129 of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that in terms of the said order, the goods were released on the petitioner furnishing a bank guarantee to the respondents on 07.12.2018 amounting to Rs.1,25,49,539/-. 9. It is stated that prior to the release of the goods, a show cause notice was issued to the petitioner company on 29.09.2018, which is contained in Annexure no.9 whereby the petitioner was called upon to show cause as to why the proposed tax and the penalty may not be levied against the petitioner. The said show cause notice was issued under section 129 (3) read with section 20 of the CGST Act. The petitioner submitted a detailed reply to the show cause notice and prayed that the show cause notice be dropped mainly on the ground that the tax was duly paid as was required under the Act and the Part- B of the e-way bill was also uploaded prior to the passing of the detention order. It is claimed that despite the submission of the reply, the department without considering the same imposed a tax liability of Rs.62,74,769.40 and levied an equal penalty of Rs.62,74,769.40 by means of an order dated 17.10.2018 as contained in Annexure no.12. 10. It is argued that the petitioner was never served with a copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exercise of the power. He further argues that no proceedings under section 73, 74 or 75 of the Act have also been initiated against the petitioner for determination of the tax liability. Thus, in short the submission of the counsel for the petitioner is that in terms of the mandate of section 129, the proper officer is neither authorized nor justified in determining the tax or imposing the penalty as has been done by means of the impugned orders and thus, the impugned orders are liable to be set aside and the amount deposited by the petitioner is liable to be refunded. 14. The Standing Counsel, on the other hand, argues that admittedly Part-B of the e-way bill was not uploaded by the petitioner prior to the commencement of the transport, which is a mandatory requirement under Rule 138 of the Rules framed under the Act and once it is admitted by the petitioner that Part-B of the e-way bill was not uploaded, no error can be found with the orders passed by the authority in exercising of the power under section 129 of the Act. He further argues that a duty is cast upon the petitioner to have uploaded Part-B of the e-way bill, which has not been discharged. In light of the said, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under subsection (1) at least three months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under subsecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized by the reasons of fraud or any wilful misstatement or suppression of facts. Section 74 is quoted herein below : 74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any will-fulmisstatement or suppression of facts .-- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under subsection (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o or within five years from the date of erroneous refund. (11) Where any person served with an order issued under sub-section (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded. Explanation 1.--For the purposes of section 73 and this section,-- (i) the expression all proceedings in respect of the said notice shall not include proceedings under section 132; (ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122 and 125 are deemed to be concluded. Explanation 2.--For the purposes of this Act, the expression suppression shall mean non-declaration of facts or information which a taxable person is required to declare in the return, statement, report or any other document furnished under this Act or the rules made thereunder, or fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; (xi) is liable to be registered under this Act but fails to obtain registration; (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently; (xiii) obstructs or prevents any officer in discharge of his duties under this Act; (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf; (xv) suppresses his turnover leading to evasion of tax under this Act; (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder; (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; (xix) issues an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all p.oceedings in respect of the notice specified in subsection (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within [fourteen days] of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of [fourteen days] may be reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29. As the proceedings have been initiated and concluded only under section 129 and the owner of the goods has not come forward for payment of such penalty as has been determined, the entire action of determining the tax and penalty under section 129(1) as has been done by means of the impugned order and upheld in the appellate proceedings, impugned before this Court, I have no hesitation in holding that the order passed on 17.10.2018 and as upheld by the order dated 31.10.2020 are not legally sustainable and are accordingly set aside. The amount paid by the petitioner for release of the goods shall be refunded to the petitioner with all expedition preferably within a period of two months from today. 30. With the said observations, the writ petition is allowed . Original Order Before Correction dated 25.11.2022 with the following remards 1. The present application has been taken up through video conferencing from Allahabad. 2. The present correction application has been filed stating that the provisions of law are wrongly quoted. 3. The errors in the judgment are apparent and contained reproduction of the section which has undergone amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded to pass a detention order on 29.09.2018 mainly on the ground that till 4.43 am on 25.09.2018, the Part-B of the eway bill had not been generated. 7. The counsel for the petitioner has drawn my attention to the inspection memo of the vehicle in question which was carried out on 29.09.2018 at about 5.47 pm. 8. As the goods were not being released, the petitioner approached this court by filing a Writ Petition Misc. Bench No.33276 of 2018, which was disposed off on 16.11.2018 directing the release of the goods on the petitioner furnishing the security in terms of section 129 read with section 67 of the CGST Act 2017. It is stated that in terms of the said order, the goods were released on the petitioner furnishing a bank guarantee to the respondents on 07.12.2018 amounting to Rs.1,25,49,539/-. 9. It is stated that prior to the release of the goods, a show cause notice was issued to the petitioner company on 29.09.2018, which is contained in Annexure no.9 whereby the petitioner was called upon to show cause as to why the proposed tax and the penalty may not be levied against the petitioner. The said show cause notice was issued under section 129 (3) read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -a, clause-b or clause-c of Section 129(1) of the Act, there is no power to determine the penalty payable which can be done only in terms of the mandate of Section 122 of the CGST Act. 13. He further argues that admittedly no proceedings for determination of the penalty or for determination of the tax outstanding have been initiated either under section 73 or 74 of the CGST Act or under section 122 of the CGST Act. He further argues that in any event there was never any dispute that the tax which is required to be paid for transport of the goods was not paid and thus, the demand as well as the imposition of the penalty is neither justified nor proper exercise of the power. He further argues that no proceedings under section 73, 74 or 75 of the Act have also been initiated against the petitioner for determination of the tax liability. Thus, in short the submission of the counsel for the petitioner is that in terms of the mandate of section 129, the proper officer is neither authorized nor justified in determining the tax or imposing the penalty as has been done by means of the impugned orders and thus, the impugned orders are liable to be set aside and the amount deposited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y refunded or on account of wrong availment inputs tax credit for any reason other than fraud or any wilful misstatement or suppression of facts. Section 73 is quoted herein below : 73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any will ful-misstatement or suppression of facts .- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund. (11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty under sub-section (9) shall be payable where any amount of self-assessed tax or any amount collected as tax has not been paid within a period of thirty days from the due date of payment of such tax. 20. Section 74 of the said Act confers power of determination of tax not paid or short paid or erroneously refunded or in case of wrongful availment of input tax credit availed or utilized by the reasons of fraud or any wilful misstatement or suppression of facts. Section 74 is quoted herein below : 74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful-misstatement or suppression of facts.- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith tax under sub-section (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund. (11) Where any person served with an order issued under subsection (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded. Explanation 1.-For the purposes of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52; (vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (viii) fraudulently obtains refund of tax under this Act; (ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder; (x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; (xi) is liable to be registered under this Act but fails to obtain registration; (xii) furnishes any false information with regard to registration particulars, either at the time of apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty; (b) on payment of penalty equal to the fifty per cent of the value of the goods or two hundred percent of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five percent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) *** (3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty as specified in clause (a) or (b) or (c) of Section 129 (1) of the Act and on payment of the said amount, the intent is to give quietus to the litigation. 27. The question that arises here is that what happened the owner of the goods or the person does not volunteer to pay the penalty as prescribed under clause (a), (b), (c) of Section 129 (1) of the Act. In the said case, the department is will equipped to initiate proceedings by taking recourse to Section 73, 74, 75 of the Act read with section 122 for determination of tax and the penalty leviable which, subject to the appeal would govern the issues in between the department and the assessee. 28. In the present case, the department has proceeded to determine the tax liability as well as penalty only under the provisions of Section 129 of the Act, which is not contemplated or intended. On a plain reading of Section 129, there is no provision under section 129 for determination of tax due, which can be done only by taking recourse to the provisions of Section 73 or 74 of the CGST Act, as the case may be. 29. As the proceedings have been initiated and concluded only under section 129 and the owner of the goods has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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