Court adjourns case on erroneous penalty imposition, directs it to be heard with leading writ petition.

Case Name:

M/s. Buland Enterprises Vs. State Of U.P. Through Principal Secretary-(GST HC Cases)

Key Takeaways:

- Courts are scrutinizing the correct application of penalty provisions under the CGST Act by tax authorities.

- Pending the constitution of the GST Appellate Tribunal, High Courts are taking up such matters to avoid undue hardship to assessees.

- The case highlights the importance of following the proper procedure and applying the correct legal provisions by tax authorities.

Issue:

Whether the High Court should intervene in the matter of erroneous imposition of penalty under Section 129(1)(b) of the CGST Act, 2017, by the tax authorities, when the petitioner claims the penalty should have been imposed under Section 129(1)(a).

Facts:

- The petitioner, a registered dealer, was transporting goods, and the vehicle was intercepted by tax authorities. The authorities found that the e-way bill showed the value of the goods along with tax as Rs. 41,30,000/-.

- However, no tax invoice or other documents were available with the transporter, which was considered a violation of Rule 138 of the CGST Rules.

- The petitioner claimed that the e-way bill was mistakenly generated and that the goods were being transported for job work, for which no tax liability had arisen. Despite the petitioner’s reply, the tax officer issued an order under Section 129(3) of the CGST Act, demanding payment of admitted tax of Rs. 6,30,000/- along with a 100% penalty under Section 129(1)(b) of the CGST Act. This order was upheld by the appellate authority.

- The petitioner contended that the liability to pay tax and penalty arose under Section 129(1)(a) of the CGST Act, and the authority had erroneously imposed the penalty under Section 129(1)(b).

Arguments:

Petitioner’s Argument:

The penalty should have been imposed under Section 129(1)(a) of the CGST Act, as the petitioner claimed the goods were being transported for job work purposes, and no tax liability had arisen.

Tax Department’s Argument:

Based on the available e-way bill and admitted materials, the authorities correctly assessed the tax and penalty liabilities under Section 129(1)(b) of the CGST Act.

Key Legal Precedents:

The court did not discuss any specific legal precedents in this order, as it was adjourning the matter to be heard along with a leading writ petition on the same issue (Writ Tax No. 942 of 2018).

Judgement:

The High Court adjourned the matter and directed it to be connected and listed with Writ Tax No. 942 of 2018 on the date fixed in the said case. The court ordered that any interim order, if granted earlier, would continue in the meantime.

FAQs:

Q1. What is the significance of the court’s decision to adjourn the matter?

A1. By adjourning the matter and directing it to be heard along with a leading writ petition, the court aims to ensure consistency in the interpretation and application of the relevant provisions of the CGST Act.

Q2. Can the petitioner still argue their case before the court?

A2. Yes, the petitioner will have an opportunity to present their arguments when the matter is heard along with the leading writ petition.

Q3. What happens if the leading writ petition is decided in favor of the petitioner?

A3. If the leading writ petition is decided in favor of the petitioner’s contention, it is likely that the court will apply the same reasoning to the present case and rule in favor of the petitioner.

Q4. Can the tax department appeal against the court’s decision?

A4. Yes, the tax department can appeal against the final decision of the court in a higher appellate forum, subject to the applicable legal provisions and procedures.

Q5. What is the significance of the interim order continuing in the meantime?

A5. The continuation of the interim order, if any, ensures that the petitioner’s interests are protected until the final decision is rendered by the court.

Sri Tanmay Sadh, learned counsel for the petitioner submits that the vehicle and goods have already been released pursuant to interim order of this Court and accordingly the matter may be adjourned.

This petition has been preferred before this Court on account of the fact that appellate tribunal has yet not been constituted under the Goods and Services Act, 2017 and many other writ petitions are pending for consideration and the leading being Writ Tax No. 942 of 2018.

In view of the above, this matter is directed to be connected and listed with Writ Tax No. 942 of 2018 on the date fixed in the said case.

Interim order, if any, to continue in the meantime.

Order Date : 22.10.2020