2023 (6) TMI 360 - HC - GST

Penalty under Section 129(1)(b) set aside; liability limited to security payment under Section 129(1)(a)

The HC set aside the penalty imposed under Section 129(1)(b) of the UPGST Act, 2012, finding no dispute regarding the genuineness of the tax invoice and ... Detention and release under Section 129(1)(a) of the UPGST Act, 2012 - penalty under Section 129(1)(b) of the UPGST Act, 2012 - genuineness of tax invoice and e way bill as determinative of penal liability - treatment of consignor as owner and requirement of opportunity to be heard - Circular dated 31.12.2018 (Clause 6) regarding treatment of goods accompanied by invoice and e way billGenuineness of tax invoice and e way bill as determinative of penal liability - penalty under Section 129(1)(b) of the UPGST Act, 2012 - detention and release under Section 129(1)(a) of the UPGST Act, 2012 - Whether imposition of penalty under Section 129(1)(b) was justified where tax invoice and e way bill were produced and the consignor claims ownership of the goods. - HELD THAT: - The Court recorded that the tax invoice and e way bill were produced on first detention and that the revenue had not formed any opinion to falsify their genuineness. In those circumstances, and in view of the Board's Circular dated 31.12.2018 (Clause 6) and earlier coordinate-bench decisions, invocation of the punitive provision under Section 129(1)(b) was not warranted where the consignor/owner steps forward; instead the machinery of Section 129(1)(a) permitting release on security/penalty commensurate with tax liability is the appropriate course. The Court accepted that the petitioner may remain liable to pay security under Section 129(1)(a) but that imposition of penalty under Section 129(1)(b) could not be sustained on the facts before it. [Paras 8, 11]Imposition of penalty under Section 129(1)(b) set aside; petitioner to be eligible for treatment under Section 129(1)(a).Treatment of consignor as owner and requirement of opportunity to be heard - detention and release under Section 129(1)(a) of the UPGST Act, 2012 - What remedial direction should follow where penalty under Section 129(1)(b) is set aside but factual/administrative aspects remain for fresh consideration. - HELD THAT: - The Court followed coordinate-bench precedents and, having set aside the penalty order, remitted the matter to the competent authority to pass a fresh order treating the petitioner as eligible for the benefit of Section 129(1)(a). The remand obliges the authority to reconsider release/conditions afresh, affording opportunity of hearing and applying the Section 129(1)(a) framework rather than the punitive provision. [Paras 12]Matter remitted to respondent No.2 to pass a fresh order within two weeks, treating petitioner eligible for Section 129(1)(a) relief and affording opportunity as required by law.Final Conclusion: Writ petition allowed; impugned order imposing penalty under Section 129(1)(b) set aside and the matter remitted for fresh consideration under Section 129(1)(a) with opportunity to the petitioner to be heard as indicated by the Court. Issues Involved:1. Quashing of order demanding penalty under Section 129(1)(b) of the UPGST Act, 2012 and detention order on GST MOV-06.2. Release of goods and vehicle in accordance with provisions of Section 129(1)(a) of the Act.The petitioner, a registered trader in iron scrap, filed a petition to quash the order demanding penalty under Section 129(1)(b) of the UPGST Act, 2012 and the detention order on GST MOV-06. The petitioner claimed to have dispatched goods to a consignee with proper tax invoice and E-way bill. The goods were detained during transportation, and although documents were produced, revenue authorities doubted the genuineness of the consignee. The petitioner argued that security may be demanded under Section 129(1)(a) of the Act, not under Section 129(1)(b) citing relevant circulars and previous court decisions.The revenue authorities raised discrepancies in the transaction and mentioned the suspension of the petitioner's registration. However, upon inquiry, it was found that the revenue had not formed an opinion to falsify the genuineness of the documents produced by the petitioner. The petitioner claimed ownership of the goods and was willing to pay security under Section 129(1)(a) of the Act. The court referred to previous decisions where penalty under Section 129(1)(b) was set aside when the consignors were registered dealers and the owner of the goods came forward for payment of penalty.The court agreed with the previous decisions and allowed the writ petition. The impugned order demanding penalty under Section 129(1)(b) was set aside, and the matter was remitted back to the respondent to pass a fresh order considering the petitioner eligible for the benefit of Section 129(1)(a) of the Act.