No GST Penalty for Goods Description Mismatch Without Tax Evasion Intent

Ashok Sharma Vs State of West Bengal & Ors. (Calcutta High Court)

The case revolves around the detention of goods under the GST framework. Ashok Sharma, the appellant, challenged the show-cause notices and penalty orders issued by the tax authorities, alleging wrongful detention of his goods and vehicle. The dispute arose over whether the goods carried matched the invoices and whether there was intent to evade taxes. The department contended that the goods in the vehicle differed from those declared in the invoices, justifying the penalty and detention under Section 129 of the CGST Act, 2017. However, the physical verification confirmed the weight and classification of the goods were as per invoices, with no substantial discrepancies. The inspecting authority made a detailed inquiry into product specifications beyond what was mentioned in the invoices, which the court deemed unnecessary.

The Calcutta High Court ruled that there was no evidence of tax evasion intent and that invoking Section 129 for detention and penalties was unjustified. It set aside the orders of the appellate and original tax authorities, allowing the appeal. The court also granted the appellant the right to seek a refund of the pre-deposit made during the appeal process. Furthermore, it directed the immediate release of the detained goods and vehicle within four days of receiving the court order. This decision reinforces procedural fairness in GST enforcement, emphasizing that authorities must have concrete grounds before detaining goods and imposing penalties.