Order Date – 17 October 2023

Parties: M/S Vacmet India Ltd. vs. Additional Commissioner Grade -2 (Appeal) and Another

Facts –

• The Petitioner, M/S Vacmet India Ltd., were transporting goods from the petitioner's manufacturing unit in Agra to its unit in Kosi Kalan, Mathura when they were intercepted and detained due to an incomplete Part 'B' of the e-way bill.
• The authorities issued a show cause notice proposing tax and penalty on the goods. The petitioner rectified the discrepancy promptly. Thereafter, on 16.05.2018, the respondent no. 2 passed the penalty order under section 129(3) of the UPGST Act. 

Issue –

• Whether the detention and imposition of tax and penalty were justified when the goods were being transferred as stock transfer?

Order –

• The Single Bench of Hon’ble High Court observed that once it was brought to the notice of the authorities that the discrepancy, which was pointed out, was rectified before passing of the seizure order, the authority ought to have taken a lenient view in the facts & circumstances of the present case.
• The goods were sent from one unit to another Learned ACSC could not point out any provision under the GST Act, which could show that while stock transfers are made within the State of Uttar Pradesh from one unit to another, i.e., Agra to Mathura, the tax is to be charged as the goods in question, which were raw material and not a finished goods.
• Since the respondents have utterly failed to show any intention to evade payment of tax in the present case, the impugned order cannot be justified.
• Once there was no intention to evade payment of tax, the entire proceedings initiated against the petitioner are vitiated. It was directed to refund any penalty paid by the petitioner.