TaxTMI 
TaxTMI 
2025 (6) TMI 2036
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.... is filed by the petitioner in the Appellate Tribunal. 2. Set aside Ann P-14 and Ann P-8 being without jurisdiction, arbitrary, unreasonable, 3. Allow the release of Bank Guarantee as furnish by the Petitioner under protest with applicable Interest. 2. The admitted facts of the case are that vehicle bearing registration No. PB03BC-3791 was intercepted at Dherowal, District Solan on 5.11.2020 at 11:54 P.M. and the Incharge of the conveyance/vehicle could not produce any e-way bill for the movement of consignment (Aluminum Scrap HSN 760220010) to respondent No. 3. Hence, the vehicle and the goods were detained under Section 129 of the Central Goods and Services Tax Act, 2017 (for short, "the Act") read with Rule 138 of the Central Goods and Services Tax Rules, 2017 (for short, "the Rules"). 3. According to the petitioner, it explained to respondent No. 3 that the goods were duty paid and the custom duty and IGST tax amounting to Rs. 4,09,144/- had already been paid before clearing the goods from custom port and, therefore, there was no intention for tax evasion from the side of the petitioner. However, despite this, respondent No. 3 passed an order on 20.11.20....
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....as under:- Section 129. Detention, seizure and release of goods and conveyances in transit. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,-- (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, which....
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....isions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon: Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) W....
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....pply as the consignee, whether in his own conveyance or a hired one or by railways or by air or by vessel, the said person or the recipient may generate the e-way bill in FORM GST EWB-01 electronically on the common portal after furnishing information in Part B of FORM GST EWB-01. (2A) Where the goods are transported by railways or by air or vessel, the e-way bill shall be generated by the registered person, being the supplier or the recipient, who shall either before or after the commencement of movement, furnish, on the common portal, the information in Part B of FORM GST EWB-01: PROVIDED that where the goods are transported by railways, the railways shall not deliver the goods unless the e-way bill required under these rules is produced at the time of delivery. (3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a transporter for transportation by road, the registered person shall furnish the information relating to the transporter in Part B of FORM GST EWB-01 on the common portal and the e-way bill shall be generated by the transporter on the said portal on the basis of the information furnished by the registe....
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....consignments are intended to be transported in one conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each such consignment electronically on the common portal and a consolidated e-way bill in FORM GST EWB-02 may be generated by him on the said common portal prior to the movement of goods. (7) Where the consignor or the consignee has not generated FORM GST EWB-01 in accordance with the provisions of sub-rule (1) and the value of goods carried in the conveyance is more than fifty thousand rupees, the transporter shall generate FORM GST EWB-01 on the basis of invoice or bill of supply or delivery challan, as the case may be, and may also generate a consolidated e-way bill in FORM GST EWB-02 on the common portal prior to the movement of goods. (8) The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered supplier on the common portal who may utilize the same for furnishing details in FORM GSTR-1: Provided that when the information has been furnished by an unregistered supplier in FORM GST EWB-01, he shall be informed electronically, if the mobile number or the email is avai....
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....As observed above, penalty imposed by the Sales Tax Authorities is only a civil liability, though penal in character, but for invoking the proceedings under Section 129 (3) of the Act, section 130 thereof is required to be read together where the intent to evade payment of tax is mandatory while issuing notice or while passing the order of detention, seizure or demand of penalty or tax, as the case may be. Meaning thereby that intention to evade tax for the imposition of penalty is sine qua non before imposing penalty. In other words, penalty in such like tax matters would require an element of "mens rea". Thus, it can be safely concluded that the presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. 10. The Hon'ble Supreme Court in CST vs. Satyam Shivam Papers (P) Ltd., (2022) 14 SCC 157 has upheld the judgment of the Telangana High Court, wherein the Court had held in favour of the assessee and underscored that authorities must not presume evasion of tax solely on procedural lapses, such as expiry of an e-way bill, especially when valid reasons are provided. It was implied by the Hon'ble Court that the penalty by the Assessing Officer under Secti....
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....sition of penalty. c. Corpus Juris Secundum states that 'a penalty imposed for a tax delinquency is a civil obligation, remedial and coercive in its nature and is far different from the penalty for a crime or a fine or a forfeiture provided as punishment for violation of criminal and penal laws'. d. An order made by an adjudicating authority under the statute with regard to penalty is not that of conviction but of determination of the breach of the civil obligation by the offender (See: Director of Enforcement vs M.C.T.M. Corp. (P) Ltd. and others, 1996 (2) SCC 471). e. Blameworthy conduct in adjudicatory proceedings is established by proof only of a breach of the civil obligation under the statute, for which the defaulters are obliged to make amends by payment of the penalty imposed. f. As per SEBI v. Cabot International Capital Corporation reported in 2004 SCCO OnLine Bombay 180 (para 47) the following principles are summarized: i. Mens rea is an essential or sine qua non for criminal offence. ii. A straitjacket formula of mens rea cannot be blindly followed in each and every case. The scheme of a particular statute ma....
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....n contradistinction to criminal or quasi-criminal proceedings, the determination is of the breach of the civil obligation by the offender. The word 'penalty' by itself will not be determinative to conclude the nature of proceedings being criminal or quasi-criminal. The relevant considerations are the nature of the functions being discharged by the authority and the determination of the liability of the contravenor and the delinquency. 13. Normally, mens rea is not an essential element for imposing a penalty for breach of civil obligations or liabilities. There can be two distinct liabilities, civil and criminal, under the same Act. 14. As regards Section 129 of the Act, the Allahabad High Court in M/s Hindustan Herbal Cosmetics vs. State of U.P. (Neutral Citation No. 2024:AHC:209) has held as under:- "8. Upon perusal of the judgments, the principle that emerges is that presence of mens rea for evasion of tax is a sine qua non for imposition of penalty. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. In the case of M/s. Varun Beverages ....
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....has illegally proceeded to pass the impugned orders before any physical verification done. 11. We find substance in the submission of the learned counsel for the petitioner. Once the e-way bill is produced and other documents clearly indicates that the goods are belongs to the registered dealer and the IGST has been charged there remains no justification in detaining and seizing the goods and asking the penalty. 18. Upon a reading of the aforesaid judgment, one cannot help, but draw a parallel between the fact situation obtaining in the aforesaid case with the one in the instant case. Here also, the petitioner had generated the e-way bill before the order imposing penalty was passed, which fact the respondents failed to take into account and this failure on the part of the respondent No. 3 was not even corrected by the appellate authority. Imposition of penalty must be backed by potent reasoning, which is totally absent in the instant case. 19. In Axpress Logistics Pvt Ltd. v. Union of India, 2018 SCC Online Allahabad 6089, the Court quashed the penalty order issued under Sections 129(1) and 129(3) of the UPGST Act, 2017, since the petitioner therein had produced e-w....
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....imposition is intrinsically linked to the presence of mens rea, a facet conspicuously absent from the record of the instant case. The order, therefore, stands vulnerable to challenge on the grounds of disproportionate punitive measures meted out in the absence of concrete evidence substantiating an intent to evade tax liabilities. Clearly, the imposition of penalties without a clear indication of intent has resulted in an arbitrary exercise of authority, undermining the principles of justice. Tax evasion is a serious allegation that necessitates a robust evidentiary basis to withstand legal scrutiny. The mere rejection of post-detention e-way bills, without a cogent nexus to intention to evade tax, is fallacious. 24. Mere technical errors, without having any potential financial implications, should not have been made the grounds for imposition of penalties. The underlying philosophy is to maintain a fair and just tax system, where penalties are proportionate to the gravity of the offence. 25. In the realm of taxation, imposition of penalty serves as a critical measure to ensure compliance with tax laws and regulations. However, a nuanced understanding prevails within legal fr....