Mere not Selling of Old Batteries on Weight Basis does not attract Penalty under GST Law: Allahabad HC [Read Order]

A Single bench of the Allahabad High Court has recently held that not selling old batteries on weight measurement basis instead of piece rate does not make the seller liable to be penalised under the Central Goods and Services Tax Act, 2017.

The petitioner is engaged in the business of sale and purchase of old batteries. 793 pieces of large damaged battery and 7538 pieces of small damaged battery were sold to M/s Shanti Prakash Power Private Limited at Gwalior through tax invoice. The goods were being sent through a truck, and were enroute to its destination, when it was intercepted by Mobile Squad near Unnao.

The description of the batteries given in the tax invoice is under two headings, i.e., large damaged battery and small damaged battery.

The truck was detained for verification, inspected and a notice under Section 20 of the Integrated Goods and Services Tax Act, 2017 was given to the driver.

In the reply furnished by the petitioner in paragraph 3, it had been stated that the battery is purchased and sold on the basis of per piece and not on the basis of weight.

After challenging the detention by preferring an appeal before the Assistant Commissioner, the appeal was dismissed by the AC, Commercial Tax Department.

Anil Prakash Mathur, appeared for the petitioner and Rishi Kumar, for the State.

It was submitted for the petitioner that the Appellate Authority was not correct to uphold the detention order and the order of penalty passed by the Assistant Commissioner on the ground that the goods sold were on the basis of number of pieces and not according to the weight.

On behalf of the state, it was submitted that the petitioner was trying to evade payment of tax and the battery was sold in terms of per piece and not according to the weight.

The bench of Justice Rohit Ranjan Agarwal observed that, “the Adjudicating Authority while passing the order dated 1.3.2022 has not recorded any finding as to how the explanation accorded by the petitioner cannot be accepted and the trade practice of purchase and sale of battery is according to weight and not per piece.”

It was also observed that, “the First Appellate Authority has failed to record any finding as to how it has arrived to the conclusion that the trade practice required the battery to be sold is according to the weight and not per piece, when the specific case of the petitioner was that he was purchasing and selling the battery on the basis of per piece and was maintaining the Books of Account, which has not been denied by the Taxing Authority.”

Further observing that, the orders by adjudicating and appellate authorities “have no legs to stand as no reasoning has been accorded by either of the authorities”, the impugned orders were set aside and the penalty amount was directed to be refunded to the petitioner.

To Read the full text of the Order CLICK HERE

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