2024 (8) TMI 840 - HC - GST

Tax Seizure Nullified: Lack of Intentional Evasion Leads to Penalty Refund and Quashing of Show Cause Notice

HC quashed tax seizure and show cause notice under UP GST Act, finding no intentional tax evasion. Court determined absence of mens rea and ordered ... Penalty under the detention and seizure regime of the Uttar Pradesh Goods and Service Tax Act, 2017 - Requirement of mens rea / intention to evade tax for imposition of penalty under Section 129 - Quashing of show cause notice and refund of penalty paid under protest - Project site address treated as business place for GST purposesPenalty under the detention and seizure regime of the Uttar Pradesh Goods and Service Tax Act, 2017 - Requirement of mens rea / intention to evade tax for imposition of penalty under Section 129 - Quashing of show cause notice and refund of penalty paid under protest - Project site address treated as business place for GST purposes - Whether the seizure, show cause notice dated December 6, 2023 and the penalty imposed under the detention provisions were maintainable in the absence of any intention to evade tax and despite the invoice address being a project site subsequently added as a business place. - HELD THAT: - The Court recorded the undisputed factual position that the address on the invoice was the project site where the petitioner was carrying out work and that this address was subsequently added as one of the petitioner's business places. The revenue did not point to any material indicating mens rea or an intention to evade tax. Relying on the principle that penalty under the detention/penalty provisions cannot be imposed without evidence of intention to evade tax (as noted in the cited Single Judge decision), the Court held that detention, the ensuing show cause notice and the imposition/collection of penalty lacked a legal basis. In view of the absence of culpable intention and the factual acceptance that the invoice address related to the petitioner's business activity, the process of detention and penalty was quashed and the collected penalty was ordered to be refunded. [Paras 3, 4, 5, 6, 7]Seizure and show cause notice dated December 6, 2023 quashed; penalty imposed and collected to be refunded to the petitioner within eight weeks.Final Conclusion: Writ petition allowed; detention and penalty set aside for lack of any demonstrated intention to evade tax and refund of penalty directed. The High Court quashed a seizure and show cause notice under Section 129 of the Uttar Pradesh Goods and Service Tax Act, 2017 due to lack of mens rea for tax evasion. The penalty imposed was ordered to be refunded to the petitioner within eight weeks. The writ petition was disposed of.