M/S Pratik Enterprises, Through Its Proprietor, Mr. Yogesh Vyas vs. Principal Commissioner, CGST And Central Excise (Headquarters), Ranchi, Prevention Cell Camp

Held

The Court held that while the petitioner had generated an e-Invoice and E-Way Bill, a significant discrepancy was found regarding the loading point of the goods. The actual loading point, identified as Rupnarayanpur, West Medinipur, West Bengal, based on GPS data and the driver's statement, differed from the place of dispatch declared in the E-Way Bill (Village-Sakui, Kharagpur, District-Pashim Medinipur, West Bengal). Furthermore, the GPS data indicated the vehicle remained at Rupnarayanpur for approximately six hours on March 8, 2025, corroborating that the goods were loaded there. This discrepancy constituted a violation of Rule 138 of the CGST Rules, 2017. The Court also noted that the petitioner paid the penalty amount and obtained the release of goods and conveyance without protest. Consequently, the Court found no merit in the petition, deeming it an afterthought and devoid of substance.

Facts

M/s. Pratik Enterprises filed a writ petition challenging an order dated March 17, 2025, imposing a penalty of Rs. 3,43,075/- under Section 129(3) of the Central Goods and Services Tax Act, 2017. The petitioner argued that the order failed to prove intent to evade tax and that all necessary documents were available. The goods in transit were inspected on March 9, 2025, revealing discrepancies. The loading point declared in the E-Way Bill differed from the driver's statement and GPS location, violating Rule 138 of the CGST Rules, 2017. The petitioner also declared 27 additional places of business and was primarily in the business of Pet Bottle Scrap. The respondents contended that the petitioner purchased scrap from unregistered persons, stored it at multiple locations, and claimed input tax credit (ITC) irregularly, with many suppliers having suspended or cancelled GST registrations.

Key Issues

1. Whether the penalty imposed under Section 129(3) of the CGST Act, 2017, is sustainable when the petitioner claims to have possessed all requisite documents and no intent to evade tax was proven? (Question of law and fact, turning on Section 129(3) and Rule 138 of CGST Rules, 2017). Petitioner's contention: The penalty is arbitrary and illegal as all necessary documents were available, and no intent to evade tax was established. The E-Way Bill and e-Invoice were generated, and the driver had the consignment note and weighment slip. Respondents' contention: The petitioner engaged in fraudulent ITC claims by purchasing from unregistered persons or suppliers with cancelled/suspended registrations. The discrepancy in the loading point as per the E-Way Bill and the actual loading point confirmed by GPS location and driver's statement constituted a violation of Rule 138 of the CGST Rules, 2017, warranting penalty.