2022 (4) TMI 241 - HC - GST

Incorrect e-way bill in head office-to-branch transport led to detention; s.129(3) penalty quashed for no tax evasion intent.

Penalty under s.129(3) CGST Act was challenged on the ground that the e-way bill wrongly declared the consignee as an additional place of business, ... Detention of goods and conveyance - penalty under Section 129(3) of the CGST Act - technical breach - intention to evade tax - ex post facto amendment of GST registration - release of detained goods and consignmentDetention of goods and conveyance - wrong declaration in E-way bill - Validity of detention of the consignment and vehicle where the E-way bill declared a different place though consignor and consignee were the same entity (head office and branch). - HELD THAT: - The Court held that the authorities were justified in detaining the goods and the conveyance because the E-way bill contained an incorrect declaration regarding the place of business, which warranted detention under the statutory scheme. However, the factual matrix showed that the consignor and consignee were the same legal entity (head office and branch), and the incorrect entry was a technical inaccuracy rather than an act indicating tax evasion. The petitioner had taken steps to amend the GST registration to include the new place of business and the registration certificate had been amended, demonstrating absence of ulterior motive. The detention therefore was sustainable as an exercise of powers but did not by itself establish malafide or intention to evade tax. [Paras 6]Detention was justified on account of wrong declaration, but the surrounding facts showed only a technical breach without intention to evade tax.Penalty under Section 129(3) of the CGST Act - technical breach - intention to evade tax - ex post facto amendment of GST registration - release of detained goods and consignment - Whether imposition of penalty under Section 129(3) was warranted where the incorrect consignee address was a technical error and registration was subsequently amended. - HELD THAT: - The Court found that in the facts of the case the petitioner committed only a technical breach by declaring an incorrect consignee address while the consignor and consignee were the same entity. There was no finding of intention to evade tax; on the contrary, the petitioner promptly took steps to amend the GST registration to include the new place of business and the registration certificate was amended. In view of these circumstances, the Court concluded that imposing the statutory penalty under Section 129(3) was unwarranted. Exercising writ jurisdiction, the Court quashed the impugned order imposing penalty and directed release of the vehicle and consignment, if not already released. [Paras 6, 7]Imposition of penalty under Section 129(3) quashed and respondent directed to release the detained vehicle and consignment.Final Conclusion: Writ petition allowed; impugned order imposing penalty under Section 129(3) quashed and the respondent directed to release the detained vehicle and consignment, the petition disposed of with no costs. Issues:Challenge to impugned order under Section 129(3) of the CGST Act, 2017 for penalty imposition.Analysis:The petitioner challenged the impugned order dated 25.03.2022 seeking to impose a penalty under CGST and SGST each, totaling a significant amount under Section 129(3) of the CGST Act, 2017. The petitioner had consigned goods from its main place of business to an additional place of business, which was not originally registered. Despite declaring the consignee differently in the E-way bill and delivery Challan, the consignment was meant for the new place of business. The consignment was detained, leading to a show cause notice and subsequent reply from the petitioner.Analysis:The petitioner argued that there was no intention to evade tax, as they had generated an E-way bill declaring the consignee as the additional place of business. They had also taken steps to amend the registration to include the new place of business. The imposition of penalties under Section 129(3) of the CGST and SGST was deemed unwarranted by the petitioner. On the other hand, the respondent argued that the petitioner had an alternate remedy under Section 107 of the CGST Act, 2017/SGST Act, 2017, making the writ petition meritless.Analysis:Upon considering the arguments, the court acknowledged that the authorities were justified in detaining the goods due to the incorrect declaration in the E-way bill. However, it was noted that the consignor and consignee were the same entity, with the petitioner having a new place of business that was not initially reflected in the GST Registration. Steps were taken ex post facto to include the new place of business in the registration, and the certificate was amended accordingly.Analysis:Given that the breach was technical in nature and there was no intention to evade tax, the court decided to quash the impugned order and allowed the writ petition. The respondent was directed to release the vehicle and consignment to the petitioner, if not already done. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed as a result.