Case Law Details
Madhav Trader Vs State of U.P. and Another (Allahabad High Court)
Section 129(1)(b) penalty imposition contrary to CBIC clarification prescribing Section 129(1)(a) penalty warrants reconsideration
In Madhav Trader vs. State of U.P. & Another, the Allahabad High Court addressed the imposition of penalty under Section 129(1)(b) of the CGST Act, 2017. The petitioner challenged a penalty order dated September 21, 2024, issued in Form GST MOV-09. The petitioner argued that the penalty should have been levied under Section 129(1)(a), as clarified by the CBIC in a circular dated December 31, 2018. The petitioner cited previous rulings, including M/s Margo Brush India vs. State of U.P. and M/s Singh Traders vs. State of U.P., which supported this interpretation. The counsel for the respondents acknowledged that the case was covered by the CBIC clarification and the earlier judgments. The court set aside the penalty order, noting that it contradicted the prescribed guidelines. It remanded the matter back to the competent authority, directing it to issue a fresh order aligned with the CBIC’s clarification within two weeks of receiving the judgment. This ruling reinforces the need for authorities to adhere to established clarifications when determining penalties under GST law.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. This writ petition has been filed by the petitioner aggrieved of the impugned demand of penalty order passed in form GST MOV-09 dated 21.09.2024 passed by respondent No. 2 under the provisions of CGST/IGST Act and Rules.
2. Submissions have been made that penalty has been imposed under Section 129(1)(b) of the Act whereas in terms of the clarification dated 31.12.2018 issued by the Central Board of Taxes and Customs GST Policy Wing, the penalty in the present case could have been levied under Section 129(1)(a) of the Act to which, the petitioner is not disputing. Reliance has been placed on M/s Margo Brush India and others Vs. State of U.P. and another: Writ Tax No. 1580 of 2022 decided on 16.01.2023 and M/s Singh Traders and 2 others Vs. State of U.P. & Another: Writ Tax No. 459 of 2024 decided on 22.03.2024.
3. Counsel for the respondents does not dispute the fact that the issue, as raised, is covered by the clarification dated 31.12.2018 as well as the judgment in the case of M/s Margo Brush India (supra).
4. In view of above fact situation, the impugned demand of penalty order dated 21.09.2024, Annexure-1, passed by respondent No. 2 is set aside. The writ petition is allowed. The matter is remanded back to the competent authority to pass a fresh order in terms of the observations made hereinbefore within a period of two weeks from the date of receipt of copy of this order.
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