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IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
RAVINDRA MAITHANI, J.
M/s Prestress Steel LLP – Petitioner
Versus
Commissioner, Uttarakhand State GST and Others – Respondents
Writ Petition (M/s) Nos. 2396, 2399 of 2023
Decided On : 26-09-2023
Goods and Services Tax - Penalty Imposition - Section 20, Section 129 of the Central/State Goods and Services Tax, 2017 - The court discussed the provisions of Section 129 of the Act, Rule 55 (5) (b) of the 2017 Rules, Section 122, Section 126, Section 130, Section 164, Rule 55, Rule 138 A, and Circular 94 issued by the Government of India. The court emphasized the interpretation of statutory provisions, the distinction between non-compliance and intentional evasion of tax, and the applicability of penalty provisions based on the facts and circumstances of each case.
Fact of the Case:
The petitioner, engaged in the business of manufacturing PC wires, challenged the penalty imposed for non-compliance with the delivery challan requirement during the transportation of goods. The petitioner contended that the penalty was disproportionate and argued that there was no intention to evade tax as all dues had been paid.
Finding of the Court:
The court found that the penalty imposed under Section 129 of the Act was not justified in this case as there was no evasion of tax and no intention to evade tax. The court held that the authorities should have proceeded under Section 122 of the Act instead of Section 129. The impugned orders were set aside, and the petitioner was directed to be refunded the deposited amount.
Issues: The main issue was whether the penalty imposed under Section 129 of the Act was justified for non-compliance with the delivery challan requirement during the transportation of goods.
Ratio Decidendi: The court emphasized the distinction between non-compliance and intentional evasion of tax, and the applicability of penalty provisions based on the facts and circumstances of each case. It held that in this case, the authorities should have proceeded under Section 122 of the Act instead of Section 129.
Final Decision: The court allowed the writ petitions, set aside the impugned orders, and directed the GST authorities to refund the amount to the petitioner. The respondents authorities were also given the liberty to proceed under Section 122 of the Act.
JUDGMENT :
RAVINDRA MAITHANI, J.
1. Since common questions of law are involved in both these petitions, they are decided by this common judgment.
2. The challenge in these petitions is made to the orders dated 09.06.2023 passed by the respondent no. 3, Assistant Commissioner State Tax/Tax Officer, Mobile Squad, Rudrapur, under Section 20 read with 129 of the Central/State Goods and Services Tax, 2017 (“the Act”).
3. Facts necessary to appreciate the controversy, briefly stated, are as follows. The petitioner is into the business of manufacturing of PC wires-Strand ACSR Core Wire and Galvanized steel wire. He purchases the raw material from Steel Authority of India Limited, Kolkata (“SAIL”). The petitioner placed an order with SAIL, the goods were transported from West Bengal to Kanpur through railway in the wagon against invoices and other documents required under the Act. The wagon was unloaded and taken into custody by the petitioner for further transportation of good to Bazpur. For that purpose two vehicles were deployed bearing registration nos. HP 939081 and UP 25 BT 6528 (“the vehicles”). Accordingly, e-way bill was also generated and goods were moved towards its destination on 04.06.2023. When the vehicles were intercepted by the respondent no. 3, it was found that the vehicles were not carrying the delivery challans as required under Rule 55 (5) (b) of the Central/State Goods and Services Rules, 2017(“the 2017 Rules”). After completing the procedure as required under the Act and Rules, by the impugned order, separate penalty has been imposed with regard to the each of the vehicles engaged in transportation. In these petitions, those two orders dated 09.06.2023 have been challenged. The petitioner also seeks refund of the amount which was deposited on 10.06.2023 pursuant to the impugned orders dated 09.06.2023.
4. It is the case of the petitioner that the imposed penalty is illegal and it has been passed without appreciating the fact that the petitioner had already ensured all the compliances under the Act. He had all the documents with him except the delivery challan.
5. Instant petition was admitted on 24.08.2023, when the Court directed the respondents to file counter affidavit with further direction to the petitioner to file rejoinder, if any. The Court passed the following order on that date:
One week thereafter, rejoinder affidavit, if any, be filed.
List this matter for final hearing on 20.09.2023, after fresh, as the first case.
No time extension for filing pleadings shall be given to any of the parties.
Parties are requested to adhere by the time given for filing proceedings.”
6. On the next date of hearing i.e. 20.09.2023, it was revealed that the respondents did not choose to file any counter affidavit. The Court proceeded to hear the matter finally, while observing as follows:
“No time extension for filing pleadings shall be given to any of the parties.
Parties are requested to adhere by the time given for filing proceedings.”
The Court shall now proceed to hear the petition in the absence of any counter affidavit, that had chosen not to be filed by the respondents.
List on 21.09.2023 for final hearing after fresh cases.”
7. In fact, in the instant case, there is no factual dispute. Facts are admitted. Questions of law has been raised by the petitioner that may be decided based on the material available in the writ petitions.
8. Heard learned counsel for the parties and perused the record.
9. Learned counsel appearing for the petitioner would submit that the impugned orders are bad in the eye of law. He would refer to the Rules 138A, 55 (3) and 55 (5) (b) of the 2017 Rules
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 Section 129 of the CGST Act must not apply to minor infractions without intent to evade tax, emphasizing moderation and rectifiability of documentation errors.
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 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.
Penalties for minor breaches under the CGST/SGST Acts should be proportionate and not severe unless there is intent to evade tax.
The main legal point established in the judgment is the requirement for generating e-way bills before the commencement of transportation of goods, the burden of proof on the taxpayer to establish lac....
Minor discrepancies in transport documentation do not warrant penalties under Section 129 of the Central Goods and Services Tax Act, with general penalties appropriately applied instead under Section....
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
Minor documentation discrepancies do not imply intent to evade tax, and valid transport documents render penalty imposition inappropriate.
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