M/S U.S Metal Products vs. State Of U P And 2 Others

Facts

M/s U.S Metal Products, a registered firm manufacturing electrical appliances and automotive parts, dispatched goods to Syska LED Lights Pvt. Ltd. via M/s Lalit Transport Corporation. The consignment, moving from Haridwar, Uttarakhand to Rajasthan, was intercepted in Uttar Pradesh. The only discrepancy noted was an error in the e-way bill, which incorrectly mentioned invoice number 3096 instead of the correct invoice number 3063. No other issues regarding the quality, quantity, or nature of the goods were found. The petitioner's appeal against the penalty order was dismissed by the Additional Commissioner, Grade-2 (Appeal), Commercial Tax, Muzaffar Nagar. The petitioner is challenging both the penalty order and the appellate order.

Held

The Court held that the proceedings initiated under Section 129 of the CGST Act were not sustainable in law. The Court found that the only discrepancy pointed out during the interception of the goods was an error in the e-way bill, where the invoice number was mentioned as 3096 instead of 3063. The Court referred to Circular No. 64/38/2018 dated 14.9.2018, which explicitly states in clause 5(d) that proceedings under Section 129 should not be initiated in cases of error in one or two digits of the document number mentioned in the e-way bill. The Court emphasized that circulars issued by the department are binding on the authorities, citing Apex Court judgments in Commissioner of Central Excise Vs. M/s Ratan Melting & Wire Industries and Commissioner of Central Tax Vs. M/s Gurukripa Resins Private Limited. Consequently, the Court quashed the impugned orders and directed the refund of any amount deposited by the petitioner.

Key Issues

1. Whether proceedings under Section 129 of the CGST Act were rightly initiated when the only discrepancy was an error in one or two digits of the document number mentioned in the e-way bill, contrary to Circular No. 64/38/2018 dated 14.9.2018? The petitioner argued that the proceedings were bad in law, relying on Circular No. 64/38/2018, specifically clause 5(d), which states that proceedings under Section 129 may not be initiated if there is an error in one or two digits of the document number mentioned in the e-way bill. The petitioner contended that since the only discrepancy was a minor error in the invoice number on the e-way bill, the initiation of proceedings under Section 129 was incorrect. The respondent revenue supported the impugned orders, implying they believed the proceedings were justified.