In W.P.(C) 6924/2022-DEL HC- Goods detained u/s129(1) of GST Act would not have been released unless tax & penalty was paid: Delhi HC remands matter to GST officer where Notice & demand order didn't clearly mention reason for imposing liability & penalty
Justices Amit Mahajan & Vibhu Bakhru [19-01-2023]

Read Order: RAM PRAKASH CHAUHAN v. COMMISSIONER OF DELHI (GOODS AND SERVICE TAX) & ANR 

Mansimran  Kaur

New Delhi, February 1, 2023: In a case relating to detention of a consignment of goods intercepted during their transportation where the order which formed the basis for penalising the appellant didnot disclose the discrepancy or mismatch between the E-Way Bills and the goods, the Delhi High Court has aksed the GST officer to consider the matter afresh.

While considering the petition, instituted by the petitioner impugning an order whereby the petitioners goods were detained under Section 129(1) of the Goods & Services Tax Act, 2017 as well as an order raising a demand of tax and penalty of a sum of 2,78,129, the Division bench of Justice Amit Mahajan and Vibhu Bakhru observed that it was apparent that neither the show cause notice nor the order of demand clearly set out the reason for imposing the tax liability as well as penalty. 

The petitioner had appealed the said orders. However, the said appeal was dismissed by the Appellate Authority. The petitioner also impugns the said appellate order.

The controversy, in the present case, related  to detention of a consignment of goods intercepted during their transportation. The petitioner stated  that it had purchased the said consignment of steel from M/s Mahendra Steels .  The said goods were in the process of being transported directly from the premises of M/s Mahendra Steels to M/s S.K. Integrated Consultants.

The petitioner's goods were detained by a detention order and on the same date, notice under Section 129(3) of the GST Act was issued. The said notice stated the reasons for detaining the goods as prima facie, the documents tendered were found to be defective.

Thereafter, the petitioner preferred an appeal before the Appellate Authority impugning the said demand of tax and the levy of penalty. The said appeal was dismissed by the Appellate Authority by an order dated December 31, 2021. 

The Appellate Authority found that the said order passed by the proper officer, was legally justified and required no interference.

After considering the submissions of the parties, the Court noted that it was unable to accept that the order of demand and penalty was  a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it was  not disputed that the same would not have been released unless the tax and penalty was paid. The Court  was  persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary.

It was apparent that neither the show cause notice nor the order of demand clearly set out the reason for imposing the tax liability as well as penalty, the Court further remarked. 

In the given facts,  the Court was of the view that it would be apposite to remand the matter to the concerned GST officer to decide afresh after giving the petitioner full opportunity to address the allegation against him.

In view of the above, the order dated October 23, 2020, raising a demand of tax and penalty, was set aside. The petition was disposed of accordingly.