2025 (8) TMI 234 - HC - GST

Petition Dismissed for Challenging CGST Penalty Under Rule 138 Due to Evidence of Intent to Evade Tax

M/s. Pratik Enterprises Versus Principal Commissioner, CGST and Central Excise (Headquarters), Ranchi, Assistant Commissioner, CGST and Central Excise, Superintendent, CGST and Central Excise (Headquarters), Ranchi.

M/s. Pratik Enterprises Versus Principal Commissioner, CGST and Central Excise (Headquarters), Ranchi, Assistant Commissioner, CGST and Central Excise, ... ISSUES: Whether the penalty imposed under Section 129(3) of the Central Goods and Services Tax Act, 2017 for alleged violation of Rule 138 of the CGST Rules, 2017 is justified where the petitioner had generated e-Invoice and E-Way Bill and possessed all requisite documents.Whether the discrepancy between the declared loading point in the E-Way Bill and the actual loading point as per GPS location and driver's statement constitutes a violation of Rule 138 of the CGST Rules, 2017.Whether the petitioner's claim of availing Input Tax Credit (ITC) from suppliers whose registration was suspended or cancelled constitutes irregular or fake ITC in contravention of Section 16 of the CGST Act.Whether payment of penalty without protest amounts to waiver or acquiescence of the petitioner's rights.Whether the writ petition challenging the penalty order is maintainable in view of the material adverse to the petitioner and the factual findings by the adjudicating authority. RULINGS / HOLDINGS: The penalty under Section 129(3) of the CGST Act was rightly imposed as there was a 'violation of Rule 138 of GST Rules, 2017' due to the discrepancy between the declared and actual loading points, corroborated by driver's statement and GPS data.The generation of e-Invoice and E-Way Bill and possession of documents alone does not preclude violation where the actual facts, such as the loading location, differ from the declared particulars, thereby breaching Rule 138 of the CGST Rules, 2017.The petitioner's availing of ITC from suppliers whose GST registration was suspended or cancelled and whose business activities were unrelated to the petitioner's trade amounted to contravention of Section 16 of the CGST Act and justified investigation.Payment of penalty without protest does not amount to waiver or acquiescence of rights; however, given the material against the petitioner, the writ petition is 'clearly an afterthought besides being devoid of any merit.'The writ petition challenging the penalty order is dismissed as lacking merit and not sustainable in view of the evidence and statutory provisions applied by the adjudicating authority. RATIONALE: The Court applied the provisions of Section 129(3) of the Central Goods and Services Tax Act, 2017, and Rule 138 of the CGST Rules, 2017, which regulate the movement of goods and require accurate declaration of loading points in E-Way Bills.Section 16 of the CGST Act was considered regarding the entitlement and legitimacy of Input Tax Credit, emphasizing that ITC availed from suspended or cancelled suppliers or unrelated business activities is irregular and subject to scrutiny.The Court relied on factual findings including GPS tracking data and driver statements to establish the violation of declared particulars in the E-Way Bill, thereby justifying the penalty.The Court noted that payment of penalty without protest does not constitute waiver but considered it indicative of the petitioner's acceptance of the order's validity in context of the evidence.No dissent or doctrinal shift was noted; the judgment affirms established principles regarding compliance with GST procedural requirements and the consequences of misdeclaration in transit documents.