Improper Penalty Notice Quashed, Emphasis on Legal Procedures in GST Transit

The court found the show cause notice imposing penalties under section 130 without adherence to the procedure under section 129 to be impermissible. The petitioner, who had already paid tax and penalty under section 129, was granted relief with the immediate release of the truck and its contents. The court emphasized compliance with legal procedures under the Central Goods and Services Tax Act, highlighting the significance of due process in matters concerning goods transit and penalty imposition.

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Issues involved:
1. Interpretation of sections 129 and 130 of the Central Goods and Services Tax Act, 2017
2. Validity of the show cause notice imposing penalty under section 130 without initiating proceedings under section 129
3. Release of goods and truck upon depositing tax and penalty under section 129

Analysis:

1. The petitioner's advocate highlighted the procedure under sections 129 and 130 of the Central Goods and Services Tax Act, 2017. Section 129 mandates the issuance of a notice and an opportunity for a hearing before passing an order, while section 130 can be invoked only after non-compliance with section 129. The advocate argued that the show cause notice dated 2.3.2019 sought to impose penalties under section 130 without following the procedure under section 129, which was deemed impermissible in law. The petitioner had already paid the tax and penalty under section 129 of the IGST Act as per the notice.

2. In response to the submissions made by the petitioner's counsel, the court issued a notice returnable on 10th April, 2019. The respondents were directed to show cause why costs should not be imposed for non-compliance with statutory provisions. The court acknowledged that the petitioner had already fulfilled the tax and penalty requirements under section 129 of the IGST Act. As an interim measure, the court ordered the immediate release of Truck No. HR-55-J-2944 and its contents. However, the petitioner was instructed to submit an undertaking within a week, committing to cooperate in further proceedings if the petition was unsuccessful.

3. The court permitted direct service and emphasized the need for compliance with the legal procedures outlined in the Central Goods and Services Tax Act, 2017. The judgment underscored the importance of following due process in cases involving the transit of goods and the imposition of penalties, ensuring that the rights of the concerned parties are safeguarded within the framework of the law.

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