Tax and penalty cannot be determined u/s 129, if owner of goods does not volunteer to pay tax: High Court

Detention & Seizure of Goods

Facts in brief:

• Petitioner company was transporting goods from Lucknow to Haryana and hired a transporter, on which a bilty tax invoice and Part-A of the e-way bill were generated.
• Petitioner has paid the tax as were required under the IGST Act, however, on account of an inadvertence Part-B of the eway bill was not generated prior to the commencement of the transport of goods.
• It is on record that the driver commenced the journey on 24th Sep at 9.30 pm from the warehouse of the petitioner company and was intercepted on 25th Sep at 4.43 am.
• The case of the petitioner is that although Part- B of the e-way bill was not generated before commencement of movement, however Part-B of e-way bill was uploaded at about 7:34 am in morning i.e. prior to the passing of the detention order.
• It is stated that despite the fact that the petitioner had uploaded the Part-B of the e-way bill at about 7.34 am, the respondents authorities proceeded to pass a detention order on 29th Sep mainly on the ground that till 4.43 am, the Part-B of the eway bill had not been generated.
• The present petition has been filed against the tax and penalty order passed u/s 129 of the CGST Act.

Petitioner:

The contention of the counsel for the petitioner is that the order imposing tax liability as well as the appellate order are bad in law and contrary to the mandate of the provisions of the CGST Act. He argues that from the plain reading of the section 129 of the Act, it is clear that on the goods being detained, the same are to be released on the owner of the goods or any other person coming forward and offering to pay the amount as indicated in clause-a, clause-b and clause-c of Section 129(1) of the Act. He argues that to determine the amount which is liable to be paid under clause-a, clause-b and clause-c of Section 129(1), the proper officer is empowered to specify the penalty payable. He argues that although the proper officer is empowered to specify the penalty which should be paid or offered to be paid under clause-a, clause-b or clause-c of Section 129(1) of the Act, there is no power to determine the penalty payable which can be done only in terms of the mandate of Section 122 of the CGST Act.

He further argues that admittedly no proceedings for determination of the penalty or for determination of the tax outstanding have been initiated either under section 73 or 74 of the CGST Act or under section 122 of the CGST Act. He further argues that in any event there was never any dispute that the tax which is required to be paid for transport of the goods was not paid and thus, the demand as well as the imposition of the penalty is neither justified nor proper exercise of the power. He further argues that no proceedings under section 73, 74 or 75 of the Act have also been initiated against the petitioner for determination of the tax liability. Thus, in short the submission of the counsel for the petitioner is that in terms of the mandate of section 129, the proper officer is neither authorized nor justified in determining the tax or imposing the penalty as has been done by means of the impugned orders and thus, the impugned orders are liable to be set aside and the amount deposited by the petitioner is liable to be refunded.

Revenue:

The Standing Counsel, on the other hand, argues that admittedly Part-B of the e-way bill was not uploaded by the petitioner prior to the commencement of the transport, which is a mandatory requirement under Rule 138 of the Rules framed under the Act and once it is admitted by the petitioner that Part-B of the e-way bill was not uploaded, no error can be found with the orders passed by the authority in exercising of the power under section 129 of the Act. He further argues that a duty is cast upon the petitioner to have uploaded Part-B of the e-way bill, which has not been discharged. In light of the said, he argues that the petition lacks merit and is liable to be dismissed.

Held:

The power of inspection, search and seizure can be carried out under Chapter XIV or in case of goods in transit under section 129. Section 129, on the plain reading, can be equated with an alternative dispute redressal mechanism and provides an opportunity to the owner of the goods or any other person to pay amounts as specified under section 129 (1)(a) or (b) or (c) of the said Act.

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Detention of Vehicle and Goods

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E-way Bill

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