Vendor Wins Battery Sales Case, Penalty Overturned After Challenging Tax Authority's Unjustified Detention

HC resolved a dispute over detention and penalty for battery sales. Petitioner sold old batteries per piece via tax invoice, challenged penalty imposed by tax authorities. HC found no legal basis for detention, ruled authorities failed to justify penalty. Court set aside detention order, directed refund of penalty amount, affirming petitioner's trade practice as valid.

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Issues:
Challenge to detention order and penalty imposition on the basis of sale of old batteries per piece instead of weight.

Analysis:
The petitioner, engaged in the sale and purchase of old batteries, challenged the detention order and penalty imposed by the Assistant Commissioner. The petitioner sold 793 large damaged batteries and 7538 small damaged batteries to a buyer through a tax invoice. The truck carrying the goods was detained for verification under relevant GST Acts. The Assistant Commissioner imposed a penalty of Rs.9,70,542/-, which the petitioner paid to release the truck and goods. The petitioner appealed to the Additional Commissioner, who upheld the penalty order citing that the batteries were sold per piece, not by weight.

The petitioner argued that the batteries were old and damaged, purchased and sold per piece, and clearly described in the invoice. The petitioner contended that there was no attempt to evade tax, and the trade practice was per piece sale. The Standing Counsel defended the penalty, alleging tax evasion and invoking Rule 46 of CGST Rules, 2017.

The High Court examined the case and found that the petitioner dealt in old batteries, sold per piece as detailed in the tax invoice. The Court noted that neither the Assistant Commissioner nor the Appellate Authority justified why the per piece sale practice was incorrect. The Court also observed that Rule 46 of CGST Rules did not support the State's argument. Consequently, the Court set aside the detention order and penalty, ruling in favor of the petitioner.

In conclusion, the High Court allowed the writ petition, directing the authorities to refund the penalty amount within one month. The judgment emphasized that the detention order and penalty lacked legal basis as the trade practice of selling old batteries per piece was valid, and the authorities failed to provide adequate reasoning for their decision.

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