H/S Halder Enterprises vs. State Of U.P. And 2 Others

Held

The Court held that the Circular No. 76/50/2018-GST dated December 31, 2018, issued by the Central Board of Indirect Taxes and Customs, is applicable. The Court found that the goods were accompanied by a proper tax invoice and E-way bill belonging to the petitioner. Therefore, the petitioner is deemed to be the owner of the goods for the purposes of Section 129 of the CGST Act. Consequently, the goods should be released in terms of Section 129(1)(a) of the CGST Act, which requires payment of applicable tax and a penalty equal to one hundred percent of the tax payable. The Court quashed and set aside the order dated October 19, 2023, passed by the authorities. The authorities were directed to carry out the exercise in terms of Section 129(1)(a) of the CGST Act within three weeks. The Court noted that the petitioner had not pressed other prayers in the writ petition.

Facts

The petitioner, H/S Halder Enterprises, filed a writ petition challenging the detention of its goods and vehicle and subsequent orders passed under Section 129 of the CGST Act. The petitioner was transporting Dried Arecanuts from Calcutta to New Delhi, accompanied by an invoice and E-way bill. The goods were intercepted in Uttar Pradesh on October 3, 2023. Physical verification revealed no discrepancy. However, the goods were detained on October 11, 2023, on the grounds that both the consignor and consignee were declared non-existent. The petitioner, who was registered under CGST at the time of interception, sought release of goods under Section 129(1)(a) of the CGST Act. The authorities, however, calculated the penalty under Section 129(1)(b) of the CGST Act, as per an order dated October 19, 2023. The petitioner's registration was subsequently suspended by authorities in West Bengal with effect from September 18, 2023.

Key Issues

1. Whether the goods detained under Section 129 of the CGST Act should be released under Section 129(1)(a) or Section 129(1)(b) of the CGST Act, given that the petitioner, as the owner of the goods, came forward with the invoice and E-way bill. Petitioner's arguments: The petitioner contended that as the owner of the goods, and having produced the invoice and E-way bill, the release of goods should be governed by Section 129(1)(a) of the CGST Act. They relied on Circular No. 76/50/2018-GST dated December 31, 2018, which clarifies that if the invoice or specified document accompanies the consignment, the consignor or consignee is deemed the owner. The petitioner also cited two Coordinate Bench judgments supporting their claim that penalty calculation should be under Section 129(1)(a) when the owner comes forward. Revenue's arguments: The respondent authorities supported their actions, stating they were correct in law because the buyer and seller did not possess CGST registration.