Proceedings u/s 129 of CGST Act cannot be intimated in Absence of Intention to Evade Tax: Allahabad HC [Read Order]
CGST Act – Evade Tax – Tax – Allahabad HC – taxscan
CGST Act – Evade Tax – Tax – Allahabad HC – taxscan
The Allahabad High Court has held that the authorities must establish an intention to evade tax for proceedings under Sections 129 and 130 of the Central Goods and Service Tax Act, 2017.
Shri Srijan Pandey, counsel appeared for the petitioner and Shri Rishi Kumar, Additional Chief Standing Counsel for the State – opposite party.
M/S Shyam Sel and Power Limited, the petitioner engaged in the business of manufacture and sale of industrial grade steel components, i.e., channel, beams, etc. The petitioner through tax invoice dated 17.11.2021 transported 4 MT, 10.800 MT and 6.970 MT of steel channels of different dimensions and 4 MT each of steel beams of different dimensions to M/s Maa Ambey Steels. The said goods were accompanied by tax invoices, e-way bills and GRs.
The goods were intercepted at Maharajpur, Kanpur and on verification, it was found that the e-way bill had been cancelled by the purchasing dealer; whereupon, form GST MOV 06 dated 22.11.2021 was prepared and the goods were seized. Subsequently, GST MOV 07 was prepared seeking a response from the petitioner.
The petitioner submitted the response that all e-way bills were duly filled up and the petitioner was not aware of the cancellation of e-way bills by the purchasing dealer, but the petitioner submitted that the goods in question were sold by the registered dealer to a registered purchasing dealer and were accompanied along with genuine documents.
Dissatisfied with the reply, the impugned order was passed under section 129(3) of the CGST Act imposing a penalty. The petitioner preferred appeal, which has also been dismissed by the impugned order.
After receiving the purchase order from Maa Ambey, a tax invoice was raised and an away bill was generated with a unique identity reflecting all relevant details as per rule 138 of the CGST Rules, including parts A & B, which was valid up to 22.11.2021.
The transporter, namely, Shiv Om Logistics, issued a consignment note in favour of the petitioner with the recipient's details as the consignee of goods and further reflecting the destination as Fazalganj, Kanpur. The said document along with goods was on its journey to its destination when it was intercepted by respondent no. 3 and the driver of the truck provided all documents, i.e., tax invoice, e-way bill, consignment note, etc.
It was submitted that while passing the said order, no intention to evade tax has been observed against the petitioner. The petitioner deposited the penalty and got the goods released and thereafter, sold them to one P.L. Trading Company through tax invoice and e-way bill, which is fully shown in the books of account specifically in Ledger.
It was argued that there was no intention to evade payment of tax. The penalty ought to have levied under section 122(ix) of the CGST Act, but not under section 129(3) of the CGST Act. While dismissing the appeal by the impugned order dated 18.06.2022, it was observed that the goods in question were not accompanied by an e-way bill, which violates section 138 of the CGST Act.
Section 129 of the CGST Act deals with the detention, seizure and release of goods in case a violation of the provisions of the CGST Act is found. Section 130 deals with the confiscation of goods or conveyance and the levy of penalty. Both sections revolve around a similar issue and provide for the proceedings available at the hands of the proper Officer upon him having found the goods in violation of the provisions of the Act, Rule 138 of the Rules framed under the CGST Act being one of them. Upon a purposive reading of the sections, it would suffice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act.
While allowing the petition, Justice Piyush Agrawal quashed the impugned order passed by respondent no. 2 as well as the impugned order passed by respondent no. 3.
To Read the full text of the Order CLICK HERE
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