Satyam Traders Vs State of U.P. And 2 Others (Allahabad High Court)
Summary: The Allahabad High Court considered a challenge by M/S Satyam Traders to a detention order dated 2 March 2025 under Section 129(1) of the Central Goods and Services Tax Act, 2017 and a penalty order dated 6 March 2025 under Section 129(3), read with Section 20 of the Integrated Goods and Services Tax Act, 2017. The authorities proceeded on two grounds: first, that the original invoice was not present with the goods and only a photocopy was available; and second, that the truck weighed 25,410 kilograms when it was weighed two days after detention, which was 270 kilograms more than the weight stated in the invoice.
The petitioner explained that the e-way bill had been properly generated and was available with the goods along with the photocopy of the invoice. In relation to the weight difference, the petitioner submitted that rain during the two days after detention could have increased the weight and, in any event, the difference was only approximately 1%. The respondents were unable to identify any specific ground establishing an intention to evade tax. The Court noted that a catena of judgments of the Court and other High Courts had held that penalty under Section 129(3) has to be based on an intention to evade tax. The petitioner relied upon the Supreme Court judgment in Assistant Commissioner (ST) and Others v. Satyam Shivam Papers Private Limited and Another, reported in (2022) 14 SCC 157, and the Allahabad High Court judgment in M/s Gobind Tabacco Manufacturing Co. & Another v. State of U.P. & 2 Others, reported in 2022 U.P.T.C. [Vol.111] – 1080.
The Court further found that the authorities had accepted the petitioner’s explanation regarding the difference in weight and that the only remaining basis for imposing the penalty was the absence of the original invoice. Since the photocopy of the invoice and the e-way bill were present with the goods, and the invoice matched the e-way bill without any discrepancy, the Court found no intention to evade tax. It accordingly held that, in the absence of mens rea to evade tax, the detention proceedings and the order under Section 129(3) were arbitrary and invalid in law. The Court therefore quashed and set aside both the detention order dated 2 March 2025 and the penalty order dated 6 March 2025. The writ petition was disposed of accordingly.
Cases Discussed
- Assistant Commissioner (ST) And Others vs. Satyam Shivam Papers Private Limited And Another (Supreme Court)
- M/s Gobind Tabacco Manufacturing Co. & Another vs. State of U.P. & 2 Others (Allahabad High Court), 2022 U.P.T.C. [Vol.111] – 1080
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Praveen Kumar, learned counsel appearing on behalf of the petitioner and learned Ankur Agarwal, learned counsel appearing on behalf of the respondents.
2. This is a writ petition under Article 226 of the Constitution of India wherein the writ petitioner is aggrieved by the impugned penalty order (MOV-09) dated March 6, 2025 under Section 129(3) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’) read with Section 20 of the Integrated Goods and Services Tax Act, 2017 passed by respondent no.3 as well as the detention order (MOV-06) dated March 2, 2025 under Section 129(1) Act.
3. Upon a perusal of documents, the ground raised by the authorities are based on two pillars – (i) the first ground is that the original invoice was not present with the goods, but a photocopy of the same was present; (ii) the weight of the truck that was weighed two days after detention was 25410 kilograms which was 270 kilograms more than the weight shown in the invoice.
4. The petitioner provided explanation and replied to the show cause notice and explained that the e-way bill was generated properly and was present with the goods and photocopy of the invoice was also present which is the required under the law. He further submitted that because of rain that took place for two days after the detention, the weight of the goods may have increased. In any event he submits that the difference in the weight is negligible and is only of 1%.
5. Learned counsel appearing on behalf of the respondent authorities could not point out any specific ground wherein intention to evade tax has been brought forward by the authorities.
6. It is to be noted that in catena of judgements of this Court and the other High Courts have categorically held that the penalty to be levied under Section 129 (3) of the Act has to be based on intention to evade tax.
7. Learned counsel appearing on behalf of the petitioner has relied upon a judgement of the Apex Court in Assistant Commissioner (ST) And Others vs. Satyam Shivam Papers Private Limited And Another reported in (2022) 14 SCC 157 and a judgement passed by coordinate Bench of this Court in M/s Gobind Tabacco Manufacturing Co. & Another vs. State of U.P. & 2 Others reported in 2022 U.P.T.C. [Vol.111] – 1080 to buttress his arguments.
8. It is to be further noted that in the order passed under Section 129 (3) of the Act, the authorities have accepted the explanation of the petitioner with regard to the difference in weight and the only reason for which the penalty has been imposed is with regard to absence of original copy of the invoice.
9. Since the photocopy of the invoice alongwth e-way bill was present, therefore, we do not find any intention to evade tax as the invoice that was present alongwith the goods was matching with the e-way bill and there was no discrepancy between the two.
10. In view of the above, since no mens rea to evade tax was there, we are of the view that the detention proceedings alongwith order under Section 129(3) of the Act are arbitrary and invalid in law. Accordingly, the impugned orders dated March 2, 2025 and March 6, 2025 are quashed and set aside.
11. With the above observations, the writ petition is disposed of.
