JCB machine detention penalty set aside for documentation issues without tax evasion intent under Section 68(1)

Calcutta HC set aside penalty of 200% of GST payable imposed on petitioner for transporting JCB machine without proper documentation. Authorities detained machine citing Section 68(1) CGST Act violation due to unsigned delivery challan and e-way bill discrepancies. Court distinguished precedents noting valid e-way bill existed and petitioner lacked tax evasion intent. HC ruled 200% penalty disproportionate for mere documentation failure, directing adjudicating authority to reconsider with reasoned order. Petition allowed.

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Issues:
The issues involved in this case are the detention of an escalator machine (JCB) by officers for lack of supporting documents, imposition of penalty under Section 129 (3) of the State Goods and Services Tax Act, 2017, and the petitioner's contention regarding the evaluation and adjudication of tax under the Act.

Detention of Machine and Imposition of Penalty:
The petitioner, a registered entity under the Central Goods and Services Tax Act, had his JCB machine detained by authorities for not producing necessary documents during transportation. An order of detention was issued under Section 129 (1) of the Act, alleging a violation of Section 68 (1). The petitioner was directed to pay a penalty of Rs. 9,93,008 for contravention of the Act and Rules. The petitioner argued that the machine had a valid e-way bill and no tax was payable as it was returning after work completion.

Controversy over Penalty Calculation:
The petitioner contended that the proper officer exceeded jurisdiction by calculating tax and specifying a penalty of 200% of the tax payable. It was argued that the penalty should not exceed Rs. 25,000 as the goods were not taxable. The petitioner relied on various judgments to support the argument that penalty imposition was disproportionate.

Legal Interpretation and Precedents:
The petitioner cited judgments from different High Courts to support the contention that the authorities erred in imposing the penalty. The judgments highlighted the importance of intent to evade tax, examination of tax applicability, and the necessity of compliance with statutory provisions. The petitioner also referred to Circular no. 64/38/2018-GST for procedural guidance.

Court Decision and Directions:
After considering submissions from both parties, the Hon'ble Justice set aside the order of penalty imposition, directing the adjudicating authority to reevaluate the issue within eight weeks. The Court emphasized that while possession of all transportation documents is crucial, the penalty should be proportionate to the offense and in line with legal provisions. The writ petition was disposed of accordingly.

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