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IN THE HIGH COURT AT CALCUTTA CIRCUIT BENCH JALPAIGURI
AMRITA SINHA, J.
Mohammad Shamasher – Petitioner
Versus
The State of West Bengal and Others – Respondents
WPA No. 85 of 2024
Decided On : 01-02-2024
Central Goods and Services Tax Act - Detention of Goods - Section 129 (1), Section 68 (1) - Rules 138, 138A, 55 of CGST Rules, 2017 - Circular No. 64/38/2018-GST - Judgments from High Courts and Supreme Court
Fact of the Case:
The petitioner, a registered proprietor, had his JCB machine intercepted by authorities for not producing documents supporting the movement of goods. The petitioner was held liable for penalty under Section 129 (3) of the Act.
Finding of the Court:
The court found discrepancies in the documents and the petitioner's contention that no tax was payable due to the non-taxable nature of the movement. The court set aside the order of penalty and directed the adjudicating authority to revisit the issue.
Issues: Violation of provisions of the Act and Rules, imposition of penalty, validity of documents supporting goods movement.
Ratio Decidendi: The court considered the intention to evade tax, non-taxable nature of the movement, and the relevance of valid documents in imposing penalty under Section 129 of the Act.
Final Decision: The impugned order was set aside, and the adjudicating authority was directed to revisit the issue within eight weeks.
JUDGMENT :
AMRITA SINHA, J.
1. The petitioner is the sole proprietor of M/s Afika Infrastructure. He is registered under the Central Goods and Services Tax Act, 2017. An escalator machine (JCB) of the petitioner returning from work was intercepted by the officers of the Bureau of Investigation, North Bengal Alipurduar Zone. The driver of the vehicle failed to produce any document in support of movement of the goods, i.e. the JCB machine. On account of the said offence order of detention under Section 129 (1) of the State Goods and Services Tax Act, 2017 was issued. The authority alleged that the provision of Section 68 (1) of the Act was violated. The petitioner was directed to pay penalty under Section 129 (3) of the Act.
2. The adjudicating authority passed order against the petitioner. An appeal was carried there from before the appellate forum which too stood rejected. The petitioner has been held liable for payment of penalty of a sum of Rs. 9,93,008/- for contravention of the provision of the Act and the Rules made thereunder. The petitioner has executed a bank guarantee for the above sum subject to which the JCB machine has been released provisionally.
3. Specific case of the petitioner is that under the provision of Section 129 (3) of the Act, the respondent authority does not have the power to evaluate and adjudicate the quantum of tax.
4. The petitioner submits that the machine in question was being transported with a valid e-way bill. The details of the machine were mentioned in the said e-way bill. The invoice number and the reason for transportation was also mentioned. The petitioner contends that no tax is payable on account of the return of the machine after completion of work. The relevant details of the movement of the goods were duly submitted before the adjudicating authority but without appreciating the applicability of Section 129 (3) of the Act, the adjudicating and the appellate authority demanded penalty which is liable to be set aside.
5. It has been contended that the proper officer exceeded his jurisdiction in calculating the quantum of tax and specifying penalty at the rate of 200% of the tax payable on such goods. The proper officer does not have the power either to determine or to specify tax under Section 129 of the Act. Non availability of the delivery challan with the vehicle is a mere procedural impropriety and the petitioner did not have any intention to evade tax. The petitioner is the owner of the JCB machine which was being returned and the same is not a taxable supply. Assuming, but not admitting, that penalty could have been charged, the same ought not to be more than Rs. 25,000/- only as the goods in question was not eligible for payment of tax. For a minor breach of not possessing the delivery challan, such heavy amount of penalty at the rate of 200% ought not to have been imposed.
6. In support of the aforesaid submission the petitioner relies upon the judgment delivered by the High Court of Uttarakhand in Prestress Steel LLP vs. Commissioner, Uttarakhand State GST, (2013) 157 Taxmann.com 112 (Uttarakhand), order dated 16th June, 2023 passed by the Hon’ble Division of this Court in MAT No. 1032/2023 IA No. CAN 1/23 and CAN 2/23, Usha Martin Limited and Another vs. The Deputy Commissioner of State Tax, Durgapur Range and Others, judgment delivered by the High Court of Allahabad in the matter of Bharti Airtel Limited vs. State of Uttar Pradesh and Others, (2023) 109 GSTR 214, judgment passed by the Hon’ble Division Bench of this Court in K.D. Gupta and Company and Another vs. Assistant Commissioner of State Tax, Barrackpore Range and Others, (2023) 108 GSTR 395.
7. Reliance has also been placed on the Circular No. 64/38/2018-GST dated 14th September, 2018 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing relating to modification of the procedure for interception of conveyances for inspection of goods in movement and detention, release and confiscation of goods and conve
The intention to evade tax, non-taxable nature of goods movement, and the relevance of valid documents are crucial in imposing penalties under Section 129 of the Act.
The main legal point established in the judgment is the distinction between non-compliance and intentional evasion of tax, and the applicability of penalty provisions based on the facts and circumsta....
Penalties under GST Act require evidence of intent to evade tax; mere technical omissions do not warrant penalties when tax has been duly paid.
The court established that valid digital documentation suffices for compliance under the GST Act, and failure to verify such documents by authorities cannot justify a penalty.
Penalties for minor breaches under the CGST/SGST Acts should be proportionate and not severe unless there is intent to evade tax.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
The absence of essential documents with intercepted goods raises a presumption of intention to evade tax, shifting the burden of proof to the assessee to rebut this presumption.
Intention to evade tax is a prerequisite for imposing penalties under GST Act; mere technical issues should not warrant such penalties.
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