GST detention penalty under Section 129(1)(b) cannot stand where the invoice is produced, and fresh hearing is required.

Production of the invoice made invocation of Section 129(1)(b) of the CGST Act unsustainable, because that clause applies on the footing that the person in charge is not the owner and the distinction between clauses (a) and (b) must be maintained. The Allahabad HC held that penalty could not be imposed on that basis once the invoice/documents were produced, and set aside the penalty order. The matter was remitted to the authority for a fresh, reasoned decision after granting the petitioners an opportunity of hearing.

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Issues: Whether penalty could be imposed under Section 129(1)(b) of the Central Goods and Services Tax Act, 2017 when the invoice was produced, and whether the impugned order deserved to be quashed with a fresh hearing.

Analysis: The petitioners' goods were intercepted and penalty was levied by treating them as non-owners under Section 129(1)(b). The invoice having been presented, the basis adopted for invoking clause (b) was unsustainable in law. The Court followed the principle earlier laid down on the distinction between clauses (a) and (b) of Section 129(1) and the effect of production of invoice/documents.

Conclusion: The penalty order under Section 129(1)(b) was held to be legally unsustainable. The impugned order was set aside and the authority was directed to grant hearing and pass a fresh reasoned order in accordance with law.

Final Conclusion: The petitioners succeeded on the legality of the penalty order, and the matter was sent back to the authority for reconsideration after hearing them.

Ratio Decidendi: Where the invoice is produced, penalty cannot be sustained under Section 129(1)(b) of the Central Goods and Services Tax Act, 2017 merely on the footing that the person in charge is not the owner of the goods.

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