Kitchen Equipments Manufacturing Co vs. Additional Commissioner Grade 2 (Appeal) And Another

Facts

The petitioner, Kitchen Equipments Manufacturing Co., dispatched goods from Ghaziabad to New Delhi for display at the AAHAR International Food & Hospitality Fair. Upon returning the goods from New Delhi to Ghaziabad on March 18, 2023, the vehicle carrying them was intercepted in Ghaziabad. The interception was based on a discrepancy in the E-way bill, which incorrectly stated Ghaziabad as the place of loading instead of New Delhi. The petitioner paid the penalty and tax under protest. The appellate authority dismissed the petitioner's appeal, affirming the initial detention order. The petitioner filed a writ petition challenging these orders.

Held

The Court held that the detention of goods and imposition of penalty were not justified. It was undisputed that the goods were dispatched with genuine documents for display at an exhibition. The discrepancy in the E-way bill, stating Ghaziabad as the place of dispatch instead of New Delhi, was a technical error or human inadvertence. The Court emphasized that for proceedings under Section 129(3) to be initiated, there must be an intention to evade tax, which was not established in this case. The authorities failed to record any finding of intent to evade tax, which is mandatory. The Court relied on its previous judgments in The Commissioner Commercial Tax U.P. Lucknow vs. S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur, Shyam Sel, and Vacmet India Ltd., which held that proceedings are not justified in the absence of a finding of tax evasion, especially when goods are accompanied by genuine documents and are not taxable. Consequently, the impugned orders were quashed, and any amount deposited by the petitioner was to be refunded.

Key Issues

1. Whether the detention of goods and imposition of penalty under Section 129(3) of the U.P.G.S.T. Act, 2017, are justified when the discrepancy in the E-way bill (place of loading mentioned as Ghaziabad instead of New Delhi) was due to inadvertence or human error, and the goods were accompanied by genuine documents for exhibition purposes? Petitioner's arguments: The petitioner contended that the goods were sent for exhibition and returned, and the E-way bill error was a mere technicality or human error, not an attempt to evade tax. They argued that the goods were not taxable as per Section 7 of the Act, and therefore, proceedings under Section 29 were not maintainable. They relied on the judgments in Vacmet India Ltd. vs. Additional Commissioner Grade-2 (Appeal) and Shyam Sel and Power Ltd. vs. State of U.P. Respondent's arguments: The respondent supported the impugned orders, arguing that if the goods had not been intercepted, the petitioner might have succeeded in evading tax due to the intentional misstatement of the place of dispatch.