Pawan Carrying Corporation vs. Commissioner CGST And Central Excise

CWJC/7985/2024HC PatnaGSTCNR BRHC01044626202413 May 2024Bench: MR. JUSTICE HARISH KUMAR,THE CHIEF JUSTICE-3 pages

AI SummaryAllowed

Facts

The petitioner, Pawan Carrying Corporation, is challenging the detention of its vehicle (Truck No. UP 78 GN 3657) and the penalty order dated 24.04.2024 (Annexure-P-7). The vehicle was detained on 30.03.2024 (Annexure-P-2). A notice was issued on 01.04.2024 (Annexure-P-6) after physical verification and recording of statements (Annexures-P-2 to P-5). The hearing was scheduled for 05.04.2024. The penalty order was eventually passed on 24.04.2024. The petitioner contends that the order is hit by limitation, citing a previous judgment of the High Court (Annexure-P-9). The revenue argued that the notice period extended to 8th April 2024, and a further seven days were required for hearing as per Section 129(4).

Held

The Court allowed the writ petition, setting aside the penalty order (Annexure-P-7) on the ground of limitation. The Court found that the proceedings were squarely covered by the declaration in Annexure-P-9. The Court reasoned that Section 139(3) of the CGST Act, 2017, mandates a notice within seven days of detention and an order within a further seven days from the date of service of such notice. Sub-section (4) of Section 129 only pertains to the opportunity of being heard, which must occur within the initial seven-day period. If the owner fails to appear within the stipulated time, the detaining officer is not prevented from passing a penalty order. However, in this case, the order was passed beyond the prescribed time limits. The ratio decidendi is that penalty orders under Section 129 must adhere strictly to the timeframes stipulated for notice and adjudication, failing which they are liable to be set aside. The vehicle and goods were ordered to be released forthwith.

Key Issues

1. Whether the penalty order dated 24.04.2024 (Annexure-P-7) is barred by limitation under Section 129 of the CGST Act, 2017, as interpreted in the High Court's previous judgment (Annexure-P-9)? Petitioner's Argument: The petitioner argues that the penalty order is invalid due to being passed beyond the statutory time limits prescribed for detention and penalty proceedings under Section 129 of the CGST Act, 2017, as established in the Court's prior ruling (Annexure-P-9). Revenue's Argument: The revenue contends that the notice issued on 01.04.2024 provided a seven-day period expiring on 8th April 2024, and an additional seven-day period was mandated for the hearing under Section 129(4) of the CGST Act, 2017. The revenue also suggested that habitual mistakes in vehicle registration numbers indicated evasion.

Sections Cited

Section 129, Section 139

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.7985 of 2024 ====================================================== Pawan Carrying Corporation a proprietory concern having its office at 133/282 Transport Nagar, Kanpur through its authorized signatory Prabhat Kumar, son of Shri Pradeep Kumar resident of village Raiyapur Bhadri Kunda, Bhadri, Pratapgarh, PS Kunda, Uttar Pradesh 230201. ... ... Petitioner/s Versus 1. Commissioner CGST & Central Excise having its office at Bir Chand Patel Path, Central Revenue Building, Patna 800001. 2. Asst. Commissioner, CGST & Central Excise, Division Darbhanga having its office at Near Congress Bhawan, N P Mishra Path, Balbhadarpur, Laheriasarai, Darbhanga 846001. 3. Superintendent CGST & Central Excise, Division Darbhanga having its office at Near Congress Bhawan, N P Mishra Path, Balbhadarpur, Laheriasarai, Darbhanga 846001. ... ... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. D.V. Pathy, Advocate Mr. Sadashiv Tiwari, Advocate For the Respondent/s : Dr. K.N. Singh, Additional Solicitor General Mr. Anshuman Singh, Sr. SC, CGST & CX Mr. Shivaditya Dhari Sinha, AC to ASG ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE HARISH KUMAR

ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE) Date : 13-05-2024 The petitioner is concerned with the detention of a vehicle (Truck) No. UP 78 GN 3657 and the penalty imposed as per Annexure- P-7 order dated 24.04.2024. The detention was by Annexure-P-2 on 30.03.2024. The notice was issued on the very next day on 01.04.2024 as per Annexure-P-6 after physical verification and recording of statement, which is evidenced by Annexures-P-2 to P-5. In Annexure P-6, the hearing was 2/3 scheduled on 05.04.2024 at 05:30 P.M. Eventually, the order was passed as Annexure-P-7 on 24.04.2024. 2. Shri D.V. Pathy, learned Counsel for the petitioner points out that the issue is covered and the order is hit by limitation, as has been declared in Annexure-P-9 judgment of this Court.

Learned ASG, however, points out that Annexure- P-6 has given the petitioner seven days’ notice which expires only on 8th of April, 2024 and then a further period of seven days has to be given for being heard as per sub-section (4) of Section 129. 4. The learned ASG also submits that habitually there seems to be mistake committed in the Registration Number of the vehicles, which is a clear case of evasion.

We notice that the petitioner is similar in both the cases, but then the officer had to initiate proceedings and conclude it within the time specifically provided under the Statute.

We are not convinced that the order can be saved on the grounds stated by the learned ASG. Section 139(3), as we found in Annexure-P-9, provides for a notice within seven days of detention and an order within a further period of seven days 3/3 from the date of service of such notice. Sub-section (4) only speaks of an opportunity of being heard which has to be necessarily within the seven days period and if the owner of the goods do not turn up within the time provided, nothing prevents the detaining officer from passing an order of penalty. In the present case, we see that it is squarely covered by the declaration as stated in Annexure-P-9. 7. We hence, allow the writ petition setting aside Annexure-P-7 order on the ground of limitation. The vehicle and the goods will be released forthwith.

P.K.P./- (K. Vinod Chandran, CJ) (Harish Kumar, J) AFR/NAFR CAV DATE Uploading Date 14.05.2024 Transmission Date

Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.