M/S Ganpati Battery Traders VS State of U.P. And 2 Others

The case at hand revolves around a writ petition challenging an order issued on April 30, 2022, by the Additional Commissioner, Grade-2 (Appeal) Second, of the Commercial Tax Department in Kanpur. The petitioner, who is involved in the business of buying and selling old batteries, sold a significant quantity of damaged batteries to M/s Shanti Prakash Power Private Limited in Gwalior on February 18, 2022. These batteries were being transported via Truck No.UP79-T-5059 when they were intercepted by the Mobile Squad near Unnao on February 23, 2022.

The interception led to the detention of the truck for verification under the Integrated Goods and Service Tax Act, 2017, along with the Central Goods and Service Tax Act, 2017. The physical inspection occurred on February 26, 2022, followed by the issuance of a notice to the truck driver, granting five days to respond under relevant sections of the IGST Act, 2017, and the CGST Act, 2017. Subsequently, the Assistant Commissioner (Mobile Squad), Unnao, imposed a penalty of Rs.9,70,542/- on March 1, 2002, and directed the petitioner to deposit the amount in accordance with the GST Act, 2017. The petitioner complied with this directive, depositing the full penalty amount, leading to the release of the truck and goods on the same day.

However, dissatisfied with the Assistant Commissioner’s decision, the petitioner appealed to the Additional Commissioner, Grade-2 (Appeal) Second, of the Commercial Tax Department, Kanpur. Unfortunately, the appeal was rejected on April 30, 2022, and the decision was communicated to the petitioner on June 6, 2022.

In the subsequent legal proceedings, Sri Anil Prakash Mathur, the petitioner’s learned counsel, argued that the Appellate Authority erred in upholding both the detention order and the penalty imposed by the Assistant Commissioner. The contention was that the goods in question were legitimately sold and transported, disputing the grounds for detention and penalty.

The case thus hinges on the legality of the detention order and the penalty imposed on the petitioner for the sale and transportation of damaged batteries. Sri Mathur, representing the petitioner, is challenging the decisions made by the Assistant Commissioner and subsequently upheld by the Appellate Authority.

petitioner had already adhered to in the tax invoice and consignment note. Therefore, the contention of the State that the petitioner was trying to evade tax by not following the prescribed rules under Rule 46 is not substantiated.

Upon thorough examination of the facts and arguments presented by both parties, it becomes evident that the petitioner, engaged in the sale and purchase of old batteries, sold a consignment of damaged batteries to M/s Shanti Prakash Power Private Limited at Gwalior, as detailed in the tax invoice dated 18.2.2022. The invoice clearly distinguished between large damaged batteries and small damaged batteries, and the petitioner maintained that these batteries were sold on a per-piece basis rather than by weight.

The Assistant Commissioner, in his order dated 1.3.2022, imposed a substantial penalty on the petitioner, which was duly paid to release the detained truck and goods. The petitioner then appealed this decision to the Additional Commissioner, Grade-2 (Appeal) Second, Commercial Tax Department, Kanpur, who upheld the earlier decision on 30.4.2022.

In defense of the petitioner’s stance, Sri Anil Prakash Mathur, learned counsel, argued that the petitioner had acted in accordance with the usual trade practice of selling batteries on a per-piece basis, especially considering their old and damaged condition. He emphasized that the tax invoice accurately described the goods, and there was no intent to deceive or evade tax.

Conversely, Sri Rishi Kumar, learned Standing Counsel for the State, contended that the petitioner’s method of sale, based on pieces rather than weight, was an attempt to avoid paying the appropriate tax. He cited Rule 46 of the Central Goods and Service Tax Rules, 2017, to support the State’s position.

Upon careful consideration, the court found that the petitioner’s explanation regarding the sale of batteries per piece was reasonable, especially given the nature of the goods being old and damaged. Neither the Adjudicating Authority nor the First Appellate Authority provided sufficient reasoning to refute the petitioner’s claim or demonstrate how the prescribed trade practice necessitated selling batteries by weight rather than per piece.

Furthermore, the court observed that Rule 46 of the CGST Rules, 2017, did not support the State’s argument, as it merely reiterated the description already provided by the petitioner in the tax invoice and consignment note.

In conclusion, the court ruled in favor of the petitioner, finding no evidence of tax evasion or misconduct. The orders of both the Adjudicating Authority and the First Appellate Authority were deemed incorrect, and the petitioner’s appeal was upheld.

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