Bhawani Traders Vs State of U.P. (Allahabad High Court)
Higher penalty cannot be imposed u/s 129(1)(b) of the CGST Act if owner of goods comes forward to pay penalty
In Bhawani Traders Pvt. Ltd. v. State of Uttar Pradesh [Writ Tax No. 854 of 2023, dated July 24, 2023], the Hon’ble Allahabad High Court ruled that the imposition of a higher penalty under section 129(1)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act) is not permissible if the owner of the goods is willing to pay the penalty for the detained goods.
Facts:
M/s. Bhawani Traders (“the Petitioner”) was the owner of the goods which were detained by the Revenue Department during the transit and subsequently, the Petitioner was served with a penalty order under section 129(1)(b) of the CGST Act by considering the Petitioner not as owner of the goods in transit. However, the Petitioner produced the valid documents such as a tax invoice, e-way bill, which were all issued in his name as the consignor.
Aggrieved by the Penalty order the Petitioner filed a writ before the Allahabad High Court and contended there was no intention to evade tax and the Petitioner was willing to deposit the penalty under protest under Section 129(1)(a) of the CGST Act, in order to release the goods.
The Respondent contended that the Petitioner was not the owner of the goods and that the penalty was rightly imposed under Section 129(1)(b) of the CGST Act.
Issue:
Whether the Revenue Department can invoke penalty under Section 129(1)(b) of the CGST Act if the owner of the goods comes forward and is willing to pay penalty?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 854 of 2023 held as under:
