2023 (10) TMI 641 - HC - GST

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

M/s Sanjay Sales Agency Versus State of U.P. and Another

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) ... Levy of penalty u/s 129(1)(b) of the Goods and Services Tax Act, 2017 - petitioner is not the owner of goods - HELD THAT:- Strong reliance has been placed upon the decision of this Court in M/S SHAHIL TRADERS VERSUS STATE OF U.P. AND ANOTHER [2023 (6) TMI 360 - ALLAHABAD HIGH COURT] which applies squarely to the case at hand, where it was held that penalty is set aside. Expressing full agreement with the view expressed by the Coordinate Bench of this Court in the case of M/s Sahil Traders, the impugned penalty order dated 08.09.2023 passed in Form MOV-09 under Section 129(1)(b) of the Goods and Services Tax Act, 2017 set aside. The writ petition is allowed. The Respondent No.2 is directed to pass fresh order treating the petitioner to be eligible to the benefit of Section 129(1)(a) of the Act. Petition allowed. 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.