2024 (11) TMI 589 - HC - GST

Vehicle detention penalty set aside when goods had proper invoices and E-way bills before registration suspension

HC allowed writ petition challenging proceedings under Section 129 CGST Act and Section 20 IGST Act. Petitioner's vehicle was intercepted while ... Detention and penalty under Section 129(1)(b) of the CGST Act - release of detained goods under Section 129(1)(a) of the CGST Act - deemed owner doctrine and applicability of circular dated 31.12.2018 - validity of documents (tax invoice and e-way bill) at the time of interceptionValidity of documents (tax invoice and e-way bill) at the time of interception - release of detained goods under Section 129(1)(a) of the CGST Act - deemed owner doctrine and applicability of circular dated 31.12.2018 - Whether goods accompanied by proper tax invoice and e-way bill at the time of interception must be released under Section 129(1)(a) despite subsequent suspension of the consignor's registration - HELD THAT: - The Court found that at the time of interception the vehicle was accompanied by the requisite documents dated 01.10.2024 and physical verification disclosed no discrepancy. The impugned order imposed penalty under Section 129(1)(b) solely on the basis that the registration was suspended by the jurisdictional authority on 03.10.2024. Relying on the principle applied in Halder Enterprises and other coordinate decisions, and on the operation of the circular dated 31.12.2018 which treats a consignor in possession of proper documents as the deemed owner for the purpose of release, the Court held that where goods are accompanied by proper tax invoice and e-way bill at interception, Section 129(1)(a) mandates release rather than imposition of penalty. The subsequent suspension of registration did not justify continuing detention or imposing penalty when the statutory condition for release was otherwise satisfied.Order imposing penalty and detaining goods under Section 129(1)(b) set aside; authorities directed to release goods in terms of Section 129(1)(a).Final Conclusion: Writ petition allowed; impugned order dated 16.10.2024 set aside and authorities directed to release the goods in accordance with Section 129(1)(a) within two weeks. Issues:Challenge to proceedings under Section 129 of CGST Act and Section 20 of IGST Act, demand of penalty order, detention order, validity of notice issued, suspension of registration, justification of penalty imposition.Analysis:The writ petition was filed challenging the proceedings initiated under Section 129 of the CGST Act and Section 20 of the IGST Act, along with a penalty order and detention order. The petitioner's vehicle was intercepted by authorities while en route from Bihar to Gurugram. The authorities detained the goods for allegedly moving without proper documents and issued a notice indicating the suspension of the petitioner's registration. The petitioner contested the notice and penalty order, arguing that the registration suspension was unjustified as the requisite documents were with the vehicle. The petitioner relied on a previous judgment in a similar case. The Standing counsel supported the impugned order, claiming the petitioner obtained registration with fake documents, justifying the penalty imposition.The Court considered the submissions and examined the evidence on record. It noted that the documents accompanying the goods were dated before the registration suspension date. Referring to a previous case, the Court emphasized that if goods are accompanied by proper tax invoices and E-way bills, the petitioner is deemed the owner, and goods should be released under Section 129(1)(a) of the CGST Act. Since the respondents did not dispute the presence of proper documents with the goods, the penalty imposition based on registration suspension was deemed unjustified. Therefore, the Court allowed the writ petition, setting aside the penalty order dated 16.10.2024 and directed the authorities to release the goods within two weeks in accordance with Section 129(1)(a) of the CGST Act.