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IN THE HIGH COURT OF ALLAHABAD
Pankaj Bhatia, J.
Bharti Airtel Ltd. Thru. D.G.M. Purna Pratap Dwivedi – Petitioner
Versus
State Of U.P. Thru. Secy. Tax And Registration Lko. and Ors. - Respondents
Writ C. No. 6620 of 2021
Decided On : 19-10-2022
Constitution of India, 1950 – Article 226 – Central Goods and Services Tax Act, 2017 – Section 67, 73, 74, 122, 123, 125, 126, 127, 128, 129 – Suppression of facts – Power of determination of tax – Determination of tax – Petition has been filed challenging order purportedly to be passed in exercise of power under Section 129 of CGST Act as well as order passed by respondent no.4 whereby appeal preferred by petitioner has been dismissed – Held, As proceedings have been initiated and concluded only under section 129 and owner of goods has not come forward for payment of such penalty as has been determined, entire action of determining tax and penalty under section 129(1) as has been done by means of the impugned order and upheld in the appellate proceedings, impugned before Court, Court have no hesitation in holding that order passed and as upheld by order are not legally substitutable and are accordingly set aside – Amount paid by petitioner for release of goods shall be refunded to petitioner with all expedition preferably within a period of two months from today – Writ petition allowed.
JUDGMENT :
1. Supplementary Affidavit filed by the petitioner is taken on record.
2. Heard Sri Ashish Mishra, the counsel for the petitioner and the learned Standing Counsel, who appears for the respondents.
3. The present petition has been filed challenging the order dated 17.10.2018 purportedly to be passed in exercise of the power under Section 129 of the CGST Act as well as the order dated 31.10.2020 passed by the respondent no.4 whereby the appeal preferred by the petitioner has been dismissed.
4. The counsel for the petitioner states that as the Tribunal contemplated under the Act has not been constituted, as such, the petitioner is availing the remedy under Article 226 of the Constitution of India and the same is being entertained in view of the admitted position that the Tribunal contemplated under the Act has not been constituted till date.
5. The facts, in brief, are that the petitioner company is a company incorporated under the Companies Act and has a warehouse situate at Lucknow as well as at Haryana Gurgaon. The company for the purposes of transportation of the goods from Lucknow to Haryana hired a transporter for transporting the said goods on which a bilty tax invoice and Part-A of the e-way bill were generated and are contained in Annexure no.1. It is stated that the petitioner paid the tax as were required under the IGST Act, however, on account of an inadvertence Part-B of the e-way bill was not generated prior to the commencement of the transport of goods. It is on record that the driver commenced the journey on 24.09.2018 at 9.30 pm from the warehouse of the petitioner company and was intercepted on 25.09.2018 at 4.43 am.
6. The case of the petitioner's company is that although the Part-B of the e-way bill was not generated, the same was attributable to the transporter, however, before the goods were actually seized, the e-way bill was generated at about 7.34 am in the morning on the next date i.e. 25.09.2018. It is stated that despite the fact that the petitioner had uploaded the Part-B of the e-way bill at about 7.34 am, the respondents authorities proceeded to pass a detention order on 29.09.2018 mainly on the ground that till 4.43 am on 25.09.2018, the Part-B of the e-way bill had not been generated.
7. The counsel for the petitioner has drawn my attention to the inspection memo of the vehicle in question which was carried out on 29.09.2018 at about 5.47 pm.
8. As the goods were not being released, the petitioner approached this court by filing a Writ Petition Misc. Bench No.33276 of 2018, which was disposed off on 16.11.2018 directing the release of the goods on the petitioner furnishing the security in terms of section 129 read with section 67 of the CGST Act 2017. It is stated that in terms of the said order, the goods were released on the petitioner furnishing a bank guarantee to the respondents on 07.12.2018 amounting to Rs.1,25,49,539/-.
9. It is stated that prior to the release of the goods, a show cause notice was issued to the petitioner company on 29.09.2018, which is contained in Annexure no.9 whereby the petitioner was called upon to show cause as to why the proposed tax and the penalty may not be levied against the petitioner. The said show cause notice was issued under section 129 (3) read with section 20 of the CGST Act. The petitioner submitted a detailed reply to the show cause notice and prayed that the show cause notice be dropped mainly on the ground that the tax was duly paid as was required under the Act and the Part-B of the e-way bill was also uploaded prior to the passing of the detention order. It is claimed that despite the submission of the reply, the department without considering the same imposed a tax liability of Rs.62,74,769.40 and levied an equal penalty of Rs.62,74,769.40 by means of an order dated 17.10.2018 as contained in Annexure no.12.
10. It is argued that the petitioner was never served with a copy of the order dated 17.10.2018, as such, the petitioner could no
Penalties for minor breaches under the CGST/SGST Acts should be proportionate and not severe unless there is intent to evade tax.
The expiration of an e-way bill during transit, without any intent to evade tax, does not justify severe penalties under the CGST Act; penalties must be proportionate to the offense committed.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
Intention to evade tax is a prerequisite for imposing penalties under GST Act; mere technical issues should not warrant such penalties.
Minor documentation discrepancies do not imply intent to evade tax, and valid transport documents render penalty imposition inappropriate.
The central legal point established is that penalty should not be imposed for minor discrepancies in the E-way bill, as clarified by the circular.
The imposition of penalties for minor discrepancies in tax-related documents without intent to evade tax is not justified under the CGST/SGST Acts.
Penalties under GST Act require evidence of intent to evade tax; mere technical omissions do not warrant penalties when tax has been duly paid.
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