2023 (10) TMI 641 - HC - GST

Ownership Dispute Resolved: GST Penalty Order Overturned, Fresh Proceedings Directed Under Section 129(1)(a)

The HC examined a GST penalty order challenging ownership and tax evasion allegations. The court found the revenue's penalty under Section 129(1)(b) ... Imposition of penalty under Section 129(1)(b) versus applicability of Section 129(1)(a) - Requirement of intention to evade tax for levy of penalty under Section 129 - Documents accompanying goods (tax invoice, e-way bill, bilty) as evidence of ownership and entitlement to benefit under Section 129(1)(a)Requirement of intention to evade tax for levy of penalty under Section 129 - Imposition of penalty under Section 129(1)(b) versus applicability of Section 129(1)(a) - The penalty imposed under Section 129(1)(b) was unsustainable because the prerequisite of intention to evade tax was not made out and the goods were accompanied by invoices and e-way bill in the petitioner's name. - HELD THAT: - The Court accepted that the goods were accompanied by tax invoice, e-way bill and bilty issued in the petitioner's name as consignor and that there was no intention to evade tax during transit. The revenue's conclusion that the petitioner was not the owner was held to be patently erroneous in the facts of this case. Since intention to evade tax is a prerequisite for invoking the penal provision under Section 129(1)(b), the imposition of penalty under that clause could not be sustained where the documentary evidence supported entitlement to the protective release provisions of Section 129(1)(a). The Court relied on the coordinate bench decision in M/s Sahil Traders (Supra) and expressed full agreement with its view.Impugned penalty order under Section 129(1)(b) set aside.Documents accompanying goods (tax invoice, e-way bill, bilty) as evidence of ownership and entitlement to benefit under Section 129(1)(a) - Direction to pass fresh order treating petitioner as eligible for benefit of Section 129(1)(a) - The matter was remitted to the Assistant Commissioner to pass a fresh order treating the petitioner as eligible for benefit under Section 129(1)(a). - HELD THAT: - Having set aside the order under Section 129(1)(b), the Court directed the revenue authority to reconsider and pass a fresh order in light of the factual finding that the goods were accompanied by invoices and e-way bill in the petitioner's name and in view of the Court's agreement with the reasoning in M/s Sahil Traders. The direction contemplates reconsideration under the protective provision of Section 129(1)(a), permitting the petitioner to deposit penalty under protest if necessary to secure release of perishable goods, and does not preclude the petitioner from pursuing available remedies to challenge any subsequent order.Respondent No.2 directed to pass fresh order treating the petitioner eligible for benefit under Section 129(1)(a); liberty to the petitioner to avail other remedies preserved.Final Conclusion: The penalty order dated 08.09.2023 imposed under Section 129(1)(b) is set aside; the Assistant Commissioner is directed to reconsider and pass a fresh order treating the petitioner as eligible for the protection under Section 129(1)(a), while preserving the petitioner's right to challenge any order by available remedies. Issues involved: Interpretation of penalty order u/s 129(1)(b) of the Goods and Services Tax Act, 2017 regarding ownership of goods and imposition of penalty.Summary:Issue 1: Interpretation of penalty order u/s 129(1)(b) of the GST ActThe writ petition challenged a penalty order dated 08.09.2023 passed by the Assistant Commissioner Ghaziabad, Respondent No.2 in Form MOV-09 u/s 129(1)(b) of the Goods and Services Tax Act, 2017. The petitioner, as the consignor, contended that the goods were accompanied by necessary documents and there was no intention to evade tax. The petitioner sought relief under Section 129(1)(a) to release the goods due to their perishable nature. The revenue argued that the petitioner was not the owner of the goods, justifying the penalty under Section 129(1)(b). However, it was acknowledged that intent to evade tax is a prerequisite for penalty under Section 129. The Court, in agreement with a previous decision, set aside the penalty order and directed a fresh order under Section 129(1)(a) for the petitioner to benefit from.Issue 2: Ownership of goods and imposition of penaltyThe petitioner, represented by counsel, argued for ownership of the goods based on accompanying documents like tax invoice, e-way bill, and bilty. The revenue contended that the petitioner was not the owner, leading to the penalty under Section 129(1)(b). The Court found the revenue's conclusion erroneous, stating that the E-way Bills as title documents accompanied the goods, indicating ownership. Consequently, the penalty proceedings should have been initiated under Section 129(1)(a) instead of 129(1)(b). The Court allowed the writ petition, directing a fresh order under Section 129(1)(a) for the petitioner. The petitioner was also granted liberty to challenge the penalty order through available remedies.