Order Date – 05 October 2023

Parties: M/S Shyam Sel And Power Limited Vs  State Of U.P. And 2 Others

Facts –

• The Petitioner, M/s Shyam Sel And Power Limited, is engaged in the business of manufacture and sale of industrial grade steel components. They have transported the goods accompanied with tax invoice, e-way bill and GR's to M/s Maa Ambey Steels.
• The goods were intercepted and on verification it was found that the e-way bill had been cancelled by the purchasing dealer. The petitioner replied to the GST MOV 07 that the documents were duly filled up and the petitioner was not aware about the cancellation of e-way bills by the purchasing dealer.
• Dissatisfied with the reply, the impugned order dated 25.11.2021 was passed under section 129(3) of the CGST Act imposing penalty.

Issue –

• Whether the imposition of penalty on the ground that the e-way bill had been cancelled by the purchasing dealer is proper?

Order –

• The Single Bench of Hon’ble High Court observed that once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the CGST Act.
• Section 129 of the CGST Act must be read with section 130 of the said Act, which mandate the intention to evade payment of tax. Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts & circumstances of the present case. It is also not in dispute that after release of the goods, the same were sold to another purchaser.
• Upon a purposive reading of the sections, it would sufice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act. This aspect is no more res integra and the same stands finalized in the judgement of the Apex Court in M/s Satyam Shivam Papers Private Limited.
• Hence the writ petition is allowed.