GST Penalty order passed before expiry of time granted for explanation deleted

GST Penalty order passed u/s 129(3) before expiry of time given for explanation deleted

In a recent judgment, Hon’ble Allahabad High Court has deleted GST Penalty order passed u/s 129(3) before expiry of time granted for opportunity of submitting an explanation, i.e. the punishment order was passed simultaneously with granting the opportunity.

ABCAUS Case Law Citation:
ABCAUS 4045 (2024) (05) HC

In the instant case, the Petitioner/assessee had challenged the penalty order U/S 129(3) passed by UPGST Authorities.

As per the Penalty order, a vehicle was intercepted by the mobile squad at a Cold Storage at Lucknow. The Vehicle driver stated that the goods have been loaded at Assam and he was to unload the goods at the said cold Storage. However, the tax invoice mentioned transportation of goods from Assam to Delhi whereas the vehicle was intercepted inside the premises of a Cold Storage.

According to the GST authorities it was a violation of Section 20 of IGST Act read with Rule 46(O). The order stated that a notice under Section129(3) was issued to the petitioner for violation of Section 20 of IGST Act read with Section 31 of the UPGST Act and Rule 46(O) and the explanation by the petitioner was awaited. The petitioner was directed to submit his explanation within seven days as to why penalty should not be imposed upon him.

The petitioner filed an appeal against the aforesaid penalty which was dismissed by means of an order passed by the Additional commissioner.

The Hon’ble High Court observed that strangely, even while giving opportunity to the petitioner to submit his explanation in seven days, the penalty was imposed against the petitioner on the same day. Therefore, the opportunity of submitting an explanation was meaningless as before the time granted for the opportunity of submitting an explanation being expired, the punishment order was passed simultaneously with granting the opportunity.

The assessee submitted that the penalty can be imposed only if it is established that the Assessee had intention to evade the tax whereas the impugned order does not record any finding of fact to this effect.

The Hon’ble High Court observed that a perusal of the order passed by the Appellate Authority indicated that the Appellate Authority had rejected the contention of the petitioner that the vehicle was intercepted at a distance of about 25 to 30 Kilometers from the Cold storage, on the ground that the petitioner could not submit any evidence in this regard. However, the Appellate Authority had affirmed the impugned order passed by the Assessing Officer, without there being any evidence and finding regarding intention of the petitioner to evade tax.

The Hon’ble High Court opined that the difference of approach adopted by the Appellate Authority in dealing with the contention of the petitioner and the department in as much as the petitioner’s contention had been rejected for want of evidence whereas the department’s contention had been accepted, although there was no evidence to support that also, cannot be appreciated.  The Appellate Authority should act in a judicial manner, adopting the same approach towards the Assessee and the department.

Accordingly, the writ petition was allowed.

The order passed by the Appellate Authority was quashed and the matter was remanded to the Appellate Authority for being decided afresh.

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