Department cannot determine tax and penalty under Section 129 for delayed e-way bill generation without Section 73/74 proceedings

HC allowed writ petition challenging demand under Section 129 for delayed e-way bill generation. Although Part-B of e-way bill was not generated due to transporter's fault, it was generated before goods were seized. Court held that Section 129 does not provide for tax determination, which requires proceedings under Section 73 or 74 of CGST Act. Department's action of determining tax and penalty solely under Section 129 was legally unsustainable. Orders dated 17.10.2018 and 31.10.2020 were set aside, directing refund of amount paid for goods release within two months.

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Issues Involved:
1. Validity of the order dated 17.10.2018 under Section 129 of the CGST Act.
2. Validity of the appellate order dated 31.10.2020.
3. Application of Article 226 of the Constitution of India due to non-constitution of the Tribunal under the CGST Act.
4. Compliance with procedural requirements under Section 129 of the CGST Act.
5. Determination and imposition of tax and penalty under the CGST Act.

Issue-wise Detailed Analysis:

1. Validity of the order dated 17.10.2018 under Section 129 of the CGST Act:
The petitioner challenged the order dated 17.10.2018, issued under Section 129 of the CGST Act, for imposing tax and penalty due to the non-generation of Part-B of the e-way bill before the commencement of goods transport. The petitioner argued that the delay in generating Part-B was inadvertent and attributable to the transporter. Despite generating the e-way bill before the goods were seized, the authorities issued a detention order and imposed a tax liability of Rs. 62,74,769.40 and an equal penalty. The court observed that Section 129 does not provide for the determination of tax due, which should be done under Sections 73 or 74 of the CGST Act.

2. Validity of the appellate order dated 31.10.2020:
The appellate order dated 31.10.2020, which dismissed the petitioner's appeal, was also challenged. The petitioner contended that the appellate authority relied on a judgment from the Madhya Pradesh High Court without considering the specific facts and legal provisions applicable to the case. The court found that the appellate order upheld the original order without proper consideration of the petitioner's arguments and the legal provisions under the CGST Act.

3. Application of Article 226 of the Constitution of India due to non-constitution of the Tribunal under the CGST Act:
The petitioner sought relief under Article 226 of the Constitution of India, as the Tribunal under the CGST Act had not been constituted. The court entertained the petition in view of the admitted position that the Tribunal was not constituted, allowing the petitioner to avail of the remedy under Article 226.

4. Compliance with procedural requirements under Section 129 of the CGST Act:
The petitioner argued that the authorities did not comply with the procedural requirements of Section 129, which mandates the release of detained goods upon payment of applicable tax and penalty or furnishing security. The court noted that the proper officer is empowered to specify the penalty payable but not to determine the tax due under Section 129. The court held that the entire action of determining tax and penalty under Section 129 was not legally sustainable.

5. Determination and imposition of tax and penalty under the CGST Act:
The petitioner contended that no proceedings for determining the penalty or tax outstanding were initiated under Sections 73, 74, or 122 of the CGST Act. The court emphasized that the determination of tax due should be done under Sections 73 or 74, not under Section 129. The court set aside the orders dated 17.10.2018 and 31.10.2020, directing the refund of the amount paid by the petitioner for the release of goods.

Conclusion:
The court allowed the writ petition, setting aside the impugned orders and directing the refund of the amount paid by the petitioner within two months. The court emphasized the proper application of the CGST Act's provisions and the necessity for procedural compliance in determining tax and penalty.

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