The imposition of penalties under the GST Act for discrepancies in compliance is justified when evidence shows violations of declared loading points and intent to evade tax obligations.

JUDGMENT :

Tarlok Singh Chauhan, C.J.

1. The instant civil writ application has been filed for grant of following reliefs:

(i) For the issuance of an appropriate writ/order/direction or a writ in the nature of certiorari quashing and setting aside the order dated 17.3.2025 passed in GST MOV-09 under Section 129 (3) of the Central Goods and Services Tax Act, 2017 ("the Act"), whereby penalty of Rs. 3,43,075/- has been levied, specifically for the reason that the said order fails to prove any intent to evade on part of the Petitioner and further because all requisite documents for conveyance of the goods were admittedly available with the petitioner.

(ii) For the issuance of an appropriate writ/order/direction or a writ in the nature of mandamus directing the Respondents to refund a sum of Rs. 3,43,075/- along with interest to the petitioner as the demand for penalty is completely arbitrary, illegal and unreasonable.

2. The undisputed facts leading to filing of the present writ application is that the goods of the petitioner which were in transit was inspected under the provision of sub-section (3) of section 68 of the Central Goods and Services Tax Act, 2017 and sub section (1) of section 129 of CGST Act, 2017 read with sub section (3) of section 68 of the State/Union Territory Goods and Services Tax Act, 2017 on 09.03.2025 and the following discrepancies were noticed.

(a) Loading point of the goods loaded in said vehicle was found to be different as declared in E- Way Bill and as per the statement of the driver and GPS location shared by the transporter/driver resulting violation of Rule 138 of CGST Rules, 2017.

(b) The Supplier of the loaded goods i.e. the petitioner had declared 27 additional places of business and to be in primary business of Pet Bottle Scrap.

3. It is the case of the respondent that as per intelligence, the modus operandi of the petitioner was to purchase the pet bottle scrap from local/un-registered persons and store the same at 27 additional places of business and thereafter to supply the pet bottle scrape to different purchaser from the said places of business. In the whole process of its business activities, there was no occasion to avail and utilize Input Tax Credit but the petitioner had been claiming huge input tax credit for payment of GST only to avoid the payment of GST. Further, during the course of verification, it was noticed that the said supplier had declared inwards/purchases which appears to be fake or not related in furtherance of its business and only meant for availing irregular Input Tax Credit during the Financial Year 2023-2024 & 2024-2025, which are as under: