Penalty under Section 129(1)(b) quashed as wrongly imposed on consignor, not firm owner; fresh hearing ordered

The HC set aside the penalty imposed under Section 129(1)(b) of the UPGST Act on the petitioner, who was the consignor named in the invoice and e-Way Bill and a registered dealer. The court held that since the petitioner was the owner of the goods and properly documented, penalty proceedings should have been directed against the firm owner rather than the driver. The penalty under Section 129(1)(b) was therefore improperly levied. The impugned order was quashed, and the respondent was granted liberty to pass a fresh order after providing the petitioner an opportunity of hearing.

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Issues:
1. Interpretation of Section 129(1)(a) and 129(1)(b) of the U.P. Goods and Services Tax Act, 2017.
2. Opportunity of hearing for consignor in case of penalty imposition.
3. Applicability of Central Board of Indirect Taxes and Customs circular on consignor/consignee ownership.
4. Validity of penalty imposition on consignor without proper notice.

Analysis:

1. The petitioner challenged an order passed against them under Section 129(1)(b) of the U.P. Goods and Services Tax Act, 2017, regarding the release of goods. The petitioner, a consignor, argued that they were not given a hearing opportunity as the order was passed against the driver of the vehicle. The petitioner contended that the order should have been passed under Section 129(1)(a) if the owner of the goods had come forward for penalty payment. Reference was made to a circular by the Central Board of Indirect Taxes and Customs stating that either the consignor or consignee should be deemed the owner if the invoice accompanies the goods.

2. The respondents argued that since the petitioner did not respond to the notice for assessment, the penalty was rightly imposed under Section 129(1)(b) of the Act. They maintained that Section 129(1)(a) would apply only if the owner of the goods steps forward for penalty payment.

3. The court found that the documents clearly identified the petitioner as the consignor, a registered dealer in the State. The court noted that a survey of the petitioner's business premises revealed no irregularities, supporting the petitioner's claim of ownership. The court emphasized that proceedings should have been initiated against the owner of the firm, not the driver, to allow a proper response to the notice. The court held that since the petitioner claimed ownership as the consignor, Section 129(1)(b) could not be invoked for penalty imposition.

4. Consequently, the court set aside the order imposing a penalty on the petitioner and directed the respondent to pass a fresh order after providing a hearing opportunity to the petitioner within two weeks. The court allowed the writ petition in favor of the petitioner.

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