M/S Sanjay Sales Agency vs. State Of U.P. And Another

Held

The Court held that the penalty imposed under Section 129(1)(b) was unsustainable. The reasoning was that the presence of the e-way bills, which are considered documents of title, accompanying the goods and issued in the petitioner's name as consignor, clearly indicated that the petitioner was the owner of the goods and there was no intention to evade tax. The Court agreed with the petitioner's submission that the revenue's conclusion that the petitioner was not the owner was patently erroneous. Consequently, the penalty proceedings should have been initiated under Section 129(1)(a) and not 129(1)(b). The Court, in full agreement with a coordinate bench's decision in M/s Sahil Traders (Supra), set aside the impugned penalty order. The operative direction was for Respondent No.2 to pass a fresh order treating the petitioner as eligible for the benefit of Section 129(1)(a) of the Act. The petitioner was also granted liberty to avail any other remedy.

Facts

The petitioner, M/s Sanjay Sales Agency, is challenging a penalty order dated 08.09.2023 passed by the Assistant Commissioner, Ghaziabad. The order, issued under Section 129(1)(b) of the Goods and Services Tax Act, 2017, imposed a penalty of Rs. 37,59,792/-. The penalty was levied on the grounds that the petitioner was not considered the owner of the goods. The goods were in transit from Delhi to Haldwani, accompanied by a tax invoice, e-way bill, and bilty issued in the petitioner's name as the consignor. The petitioner contended that there was no intention to evade tax and that they were the rightful owner of the goods. They expressed willingness to deposit the penalty under protest under Section 129(1)(a) to secure the release of the goods, citing their perishable nature and potential value depreciation.

Key Issues

1. Whether the penalty imposed under Section 129(1)(b) of the Goods and Services Tax Act, 2017, is sustainable when the goods were accompanied by proper documentation (tax invoice, e-way bill, bilty) in the petitioner's name as consignor, indicating no intention to evade tax? Petitioner's Contention: The petitioner argued that the penalty was wrongly imposed under Section 129(1)(b) because the goods were duly accompanied by tax invoice, e-way bill, and bilty in their name, establishing them as the owner and demonstrating no intention to evade tax. They relied on the case of M/s Sahil Traders Vs. State of U.P. (Writ (Tax) No.178 of 2023). The petitioner also expressed readiness to deposit penalty under Section 129(1)(a) for the release of perishable goods. Respondent's Contention: The revenue opposed the petition, asserting that the petitioner was rightly held not to be the owner of the goods and that the penalty under Section 129(1)(b) was correctly imposed. However, the revenue conceded that an intention to evade tax is a prerequisite for penalty under Section 129.