Tax and penalty in GST cannot be imposed on the basis of presumption: High Court

High court dismissed the revenue's petition and upheld the order of Appellate Authority deleting the said tax and penalty.

Facts in brief:

• Goods of taxpayers were intercepted by revenue on the intelligence received that, goods were being transported twice over on the set of invoices.
• After the interception, the statement of the truck driver was recorded.
• Based upon the said statement, the revenue authorities passed an order u/s 129(3) of the CGST Act, whereby the taxpayer was directed to pay the tax of Rs.7,23,700/- and further cess of Rs.19,05,024/-.
• The said order was challenged by taxpayer by preferring an appeal.
• The appellate authority held that there was no material available with the revenue for detention and seizure of the goods and for passing the orders u/s 129(3) of the CGST Act.
• While deciding the appeal, the appellate authority after referring to the provisions of Section 129 held that it is well settled that the levy of tax and penalty cannot be based upon the presumption.

The present petition has been filed by Revenue challenging the order passed by appellate authority, whereby the demand of tax and penalty imposed upon taxpayer u/s 129(3) of the CGST Act was set aside.

The Counsel for the revenue argues that the petitioners had received intelligence that the goods are being transported twice over on the same set of invoices.

Held:

The plain reading of the provisions of CGST Act makes it clear that the provisions as contained in Chapter 19 including Section 129 are the provisions for release of goods intercepted during transportation on the ground as engrafted therein and provides an opportunity to the assessee to take the benefit and to come forward for release of the goods on payment of the amounts as indicated in Section 129 (1)(a)(b) and (c) as the case may be.

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