Penalty under Section 129(3) quashed for violating natural justice by denying hearing before penalty order issuance

The HC quashed the penalty imposed under Section 129(3) of the CGST Act, holding that the simultaneous issuance of the notice under Section 129(1)(a) and the penalty order violated the principles of natural justice. The court found that no opportunity was given to the petitioner to be heard before the penalty was imposed, rendering the penalty order unsustainable. The matter was remanded to the Joint Commissioner for reconsideration in accordance with statutory requirements.

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Issues involved:
The judgment involves the legality of penalty imposed on the petitioner under the Central Goods and Services Tax Act for moving goods without a valid e-way bill, and the subsequent rejection of the petitioner's appeal by the first appellate authority.

Details of the Judgment:

1. The petitioner's vehicle was intercepted due to an expired e-way bill, leading to a penalty under Section 129(3) of the Act. The petitioner challenged this penalty along with the rejection of the appeal by the first appellate authority.

2. The petitioner argued that a breakdown of the vehicle prevented timely movement through Bihar, and the penalty should consider this circumstance. Additionally, it was contended that the notice and penalty order were issued simultaneously, without the mandatory opportunity for a show cause and hearing.

3. The State contended that the e-way bill had expired before the interception of the vehicle, and no extension request was made within the permissible time frame. The petitioner could not benefit from the provision allowing an extension within 8 hours of expiry.

4. The Court observed that the notice and penalty order were issued simultaneously, without evidence of the petitioner's hearing. This lack of opportunity for the petitioner violated the statutory requirements and principles of natural justice under Section 129(4) of the Act.

5. Consequently, the Court deemed the penalty order unsustainable and quashed it, remanding the matter to the Joint Commissioner of State Tax for proper consideration.

6. The petitioner agreed to appear before the authority with a response to the show cause, which must be evaluated with a due opportunity for hearing as per statutory provisions.

7. The Court directed the refund of 25 percent of the amount deposited by the petitioner for the appeal, to be processed within a week of the petitioner's appearance before the proper officer.

8. Ultimately, the writ petition was allowed in favor of the petitioner.

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