A division bench of the Delhi High Court has held that the payment of tax and penalty to release the detained goods shall not be treated as “admission” on the part of the assessee and the same cannot be the sole reason to uphold the GST liability.
Justice Vibhu Bakhru and Justice Amit Mahajan was considering a petition by Ram Prakash Chauhan where though there has been no mismatch in the quantity of the goods found in the vehicle and the invoice produced, the GST department detained the vehicle on the ground that the goods were not accompanied by an E-Way Bill. However, in order to release the vehicle, the assessee paid tax, interest and penalty.
The Appellate Authority found that the order dated 23.10.2020, passed by the proper officer, was legally justified and required no interference since the assessee “has admitted the liability fastened upon him by paying the demand towards tax, interest and penalty to the government.”
The division bench, after considering the facts, held that “the order passed by the Appellate Authority, the order which formed the basis for penalizing the appellant too does not disclose the discrepancy or mismatch between the E-Way Bills and the goods.”
Concluding the order in favor of the petitioner and quashing the order and show cause notices, the bench held that “We are unable to accept that the order of demand and penalty is a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it is not disputed that the same would not have been released unless the tax and penalty was paid. We are persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary.”
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