Rnyn Steel Vs Assistant Commissioner (ST) (Madras High Court)
In Rnyn Steel vs. Assistant Commissioner (ST), the Madras High Court quashed a GST penalty imposed for the detention of goods during transportation. The petitioner had purchased MS Scrap from a supplier in Chennai and later transported the same to a buyer in Andhra Pradesh with valid e-way bills. However, on April 20, 2022, the transport vehicle was intercepted at Redhills, and the goods were detained despite the driver presenting all required documents. The tax authorities alleged discrepancies in the location from which the goods were loaded and imposed a penalty of ₹5,11,928. The petitioner paid the penalty to secure the release of goods but later challenged the order, arguing that no show cause notice was served or uploaded on the GST portal before the penalty was imposed.
The High Court ruled in favor of the petitioner, stating that the detention and penalty lacked justification under Section 129 of the CGST Act, 2017. The court found no valid reasons in the Physical Verification Report to warrant seizure. It further observed that the petitioner was denied the opportunity to respond before the penalty was imposed, making the proceedings invalid. Consequently, the penalty order was quashed, and the court directed that the penalty amount be adjusted against the petitioner’s future tax liabilities. The case underscores the importance of procedural compliance in GST enforcement.
