Authorities cannot determine tax liability under Section 129 GST Act meant for goods in transit disputes

The HC held that authorities incorrectly proceeded to determine tax liability and penalty solely under Section 129 of the GST Act, which is not contemplated for tax determination. Section 129 provides alternative dispute resolution for goods in transit, allowing release upon penalty payment, but tax determination requires invoking Sections 73 or 74 of CGST Act. The court found prima facie case for interim relief, ordering vehicle release upon payment of demand excluding CESS amount, with bank guarantee required for CESS portion. Matter scheduled for final hearing after six weeks before appropriate Circuit Bench.

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Issues involved:
The issues involved in the judgment are the challenge to the order passed under Section 129 (3) of Goods and Service Tax Act, 2017 dated 30th May, 2023 and the prayer for an interim order for the release of the vehicle.

Details of the Judgment:

Challenge to Order Under Section 129 (3):
The petitioner challenged the order under Section 129 (3) of the Act, contending that the penalty amount was determined contrary to the law and without jurisdiction. The petitioner argued that the calculation of the value of the detained car by the respondent was arbitrary and against statutory provisions.

Jurisdiction and Authority of Respondent:
The respondent imposed a penalty on the petitioner under Section 129 of the Act, alleging non-compliance with tax invoice and delivery chalan requirements. The respondent conducted an inquiry, provided an opportunity to the petitioner, and imposed the penalty. The petitioner contended that the order was not maintainable as it was appealable.

Interpretation of Section 129 of the Act:
The Court considered the interpretation of Section 129 of the Act and other relevant provisions. It noted that the issue involved a question of law regarding the valuation of goods for penalty imposition and whether the penalty could be based on the margin of sale of the second-hand car. The Court found that the issues required final adjudication after giving an opportunity to file an affidavit.

Court's Decision and Interim Order:
The Court directed the respondents to file an affidavit-in-opposition within four weeks and allowed the petitioner to reply within two weeks thereafter. An interim order was granted for the release of the vehicle upon payment of the impugned demand excluding the CESS amount. The petitioner was required to furnish a bank guarantee for the CESS amount, renewable every six months. The vehicle was to be released within a week of fulfilling the specified conditions.

Conclusion:
The Court found that the issues raised in the writ application required further examination and granted an interim order for the release of the vehicle subject to specified conditions. The matter was scheduled for a hearing before the appropriate Circuit Bench after six weeks.

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