Goods detained for cancelled e-way bill u/s129 CGST: intent to evade tax required; detention set aside

Detention and penalty under s.129 CGST Act for alleged non-accompaniment of a valid e-way bill was challenged. The HC held that s.129(3) must be read with s.130, making intent to evade tax a sine qua non for detention, seizure, and penalty; mere cancellation of the purchaser's e-way bill, not intimated to the consignor and promptly explained upon seizure, constituted only a minor breach without any recorded finding of tax evasion. Consequently, initiation under s.129 was impermissible and, if at all, action could lie under s.122 on facts. The writ was allowed and the impugned detention/seizure/penalty action was set aside.

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Issues:
The judgment involves the constitution of GST Tribunal in Uttar Pradesh and challenges against orders imposing penalty under CGST Act.

Constitution of GST Tribunal:
The petitioner filed a writ petition due to the absence of a GST Tribunal in Uttar Pradesh as per the Central Government's notification. The case pertains to challenging orders dated 18.06.2022 and 25.11.2021 passed by the respondents dismissing the appeal and confirming a penalty of Rs. 5,51,602 on the petitioner.

Challenges against Penalty Orders:
The petitioner, engaged in the business of manufacturing steel components, transported goods accompanied by tax invoices, e-way bills, and GRs. The goods were seized due to a canceled e-way bill by the purchasing dealer. The petitioner contended that there was no intention to evade tax and that the penalty should have been levied under a different section of the CGST Act. The appeal was dismissed based on the absence of an e-way bill, violating section 138 of the CGST Act.

Arguments and Submissions:
The petitioner's counsel argued that the penalty should have been imposed under a specific section of the CGST Act and cited a relevant Supreme Court judgment. The Additional Chief Standing Counsel supported the impugned orders, stating that the petitioner failed to provide a genuine e-way bill with the goods, justifying the penalty under section 129 of the CGST Act.

Court's Analysis and Decision:
The Court observed that the petitioner was unaware of the canceled e-way bill by the purchaser and had communicated the circumstances to the authorities. It was noted that no intent to evade tax was observed during the proceedings. The Court highlighted the necessity of intent to evade tax for penalty under sections 129 and 130 of the CGST Act. Referring to relevant legal provisions and precedents, the Court concluded that the penalty should have been imposed under a different section of the Act. Citing previous judgments, the Court quashed the impugned orders dated 18.06.2022 and 25.11.2021.

Conclusion:
In line with legal principles and precedents, the Court allowed the writ petition, quashing the orders imposing penalties on the petitioner. The judgment emphasized the importance of intent to evade tax for penalty under the CGST Act, ultimately ruling in favor of the petitioner.

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