2023 (9) TMI 505 - HC - GST

Goods in Transit: Valid Documentation Defeats Penalty, Provides Path for Further Legal Challenge Under GST Act Section 129

M/s Diginx Trader Versus State of U.P. and Another

The HC allowed the writ petition challenging a penalty order under GST Act. The court found the penalty under Section 129(1)(b) unjustified, given the ... Penalty order u/s 129(1)(b) of the Goods and Services Tax Act, 2017 by not treating the petitioner to be the owner of goods - intent to evade present or not - HELD THAT:- The E-way Bills being the documents of title to the goods were accompanying the goods hence, the conclusion of the revenue that the petitioner was not the owner of the goods is patently erroneous. Consequently, the penalty proceedings were liable to be initiated under Section 129(1)(a) and not 129(1)(b) as has been done in the present case. Strong reliance has been placed upon the decision of this Court in M/s Sahil Traders Vs. State of U.P. [2023 (6) TMI 360 - ALLAHABAD HIGH COURT] which applies squarely to the case at hand, where reliance placed in coordinate bench in M/s Margo Brush India [2023 (1) TMI 1237 - ALLAHABAD HIGH COURT] where it was held that levy of penalty under Section 129(1)(b) of the Act was not called for and could not be justified as Section 129(1)(a) of the Act provides that where owner of the goods comes forward for payment of penalty, the amount has to be two hundred per cent of the tax payable, whereas, in the case in hand, the penalty has been levied to the tune of hundred per cent of the value of the goods. The impugned penalty order dated 5.8.2023 passed in Form MOV-09 under Section 129(1)(b) of the Goods and Services Tax Act, 2017 set aside - petition allowed. Issues involved:The judgment deals with a penalty order passed under Section 129(1)(b) of the Goods and Services Tax Act, 2017, where the petitioner was penalized for not being treated as the owner of goods despite having relevant documents like tax invoice, e-way bill, and bilty in their name. The primary issue was whether the petitioner should be considered the owner of the goods and if the penalty imposed was justified.Details of the Judgment:1. The petitioner, through their counsel, argued that they were the rightful owner of the goods in transit and were willing to deposit the penalty under protest to release the goods due to their perishable nature. Reference was made to a previous court decision that applied directly to the current case. 2. The revenue's counsel contended that the petitioner was correctly not considered the owner of the goods, justifying the penalty under Section 129(1)(b). However, it was acknowledged that the intention to evade tax is a prerequisite for such penalties. The presence of e-way bills as title documents with the goods contradicted the revenue's conclusion that the petitioner was not the owner, suggesting the penalty should have been initiated under Section 129(1)(a).3. The court, in agreement with a previous decision, set aside the penalty order and directed the Respondent to reconsider the case under Section 129(1)(a) instead of (b). The writ petition was allowed, granting relief to the petitioner.4. Additionally, the petitioner was given the liberty to pursue any available remedy to challenge the assessment order, ensuring their right to further legal recourse.