What Happened Exactly :
- The petitioner is engaged in the business of manufacture and sale of industrial grade steel components.
- The petitioner sold steel channels to M/s Maa Ambey Steels.
- The said goods were being transported to buyer’s location and were accompanied with tax invoices, e-way bill and GR’s.
- The goods were intercepted in the journey. It was found that e-way bill had been cancelled by the purchasing dealer. The goods were seized by the authorities.
- The petitioner submitted the response that all e-way bills were duly filled up and the petitioner was not aware about the cancellation of e-way bills by the purchasing dealer. But 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 penalty.
- Feeling aggrieved by the aforesaid order, the petitioner preferred appeal, which was also dismissed.
- Therefore, the petitioner filed this petition in high court challenging the penalty.
Court's Decision :
- or invoking the proceeding under section 129(3) of the CGST Act, section 130 of the CGST Act was required to be read together, where the intent to evade payment of tax is mandatory.
- Section 129 of the CGST Act must be read with section 130 of the Act.
- 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.
- Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated.
- Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, the breach was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the Act.
- The impugned orders are quashed and the writ petition is allowed.
The information provided in this presentation does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This presentation is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi-judicial authorities may not take a position contrary to the views mentioned herein.