Mid Town Associates vs Additional Commissioner Grade-2 (Appeal)

This writ petition is filed under Article 226 of the Constitution of India, wherein the petitioner has prayed for the issuance of a writ of certiorari to quash the impugned order dated January 4, 2020, passed in appeal by the Additional Commissioner Grade-2 (Appeal), Judicial Division 2nd State Tax, Moradabad (respondent No. 1). The appeal in question was preferred against a penalty order dated May 21, 2019, issued by the Assistant Commissioner, State Tax, Mobile Squad, Unit – III, Moradabad (respondent No. 2). The petitioner, a registered dealer, is engaged in the manufacturing, trading, and exporting of various handicraft items such as iron, glass, wax, marble, tiles, and wooden handicrafts. On May 20, 2019, the goods in question were being transported from Chandigarh to the USA via the Inland Container Depot (ICD) in Moradabad, as detailed in Invoice No. MID/126. The transportation of these goods was assigned to a truck bearing registration No. HR 38 P 8575. However, on May 21, 2019, at 08:52 am, respondent No. 2 intercepted and detained the said truck at Moradabad on the grounds that the goods were being transported without an E-Way bill, which is a mandatory document for such movements under the GST regime.

Subsequently, an order of detention was issued under Section 20 of the Integrated Goods and Services Tax Act (hereinafter referred to as ‘the IGST Act’) read with Section 129 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”), on the same day, May 21, 2019. The detention order was based on the presumption that the goods were being transported with the intention to evade tax due to the non-production of the E-Way bill. Following this, a notice under Section 20 of the IGST Act read with Section 129 (3) of the CGST Act was issued to the petitioner, directing them to show cause as to why an amount of tax of Rs.2,90,011/- along with a penalty of the same amount should not be recovered. Remarkably, on the same day of issuing the show cause notice, respondent No. 2 proceeded to pass the penalty order under Section 20 of the IGST Act read with Section 129 (3) of the CGST Act, thereby imposing a penalty on the petitioner.

Aggrieved by the penalty order dated May 21, 2019, the petitioner filed an appeal before respondent No. 1. However, respondent No. 1, via its order dated January 4, 2020, dismissed the appeal and affirmed the order passed by respondent No. 2, thereby upholding the penalty imposed on the petitioner. This decision was challenged by the petitioner, who felt that the order passed by respondent No. 1 was unjust and that the penalty imposed was not in accordance with the law. The petitioner contended that the interception and detention of the goods were arbitrary and without proper justification, as the goods were being transported lawfully with all necessary documentation except for the E-Way bill, which was an oversight and not an intentional act to evade taxes.

The petitioner further argued that the Additional Commissioner failed to consider the factual matrix of the case and did not provide a fair opportunity for the petitioner to present their case. The petitioner maintained that the penalty imposed was excessive and punitive, causing undue hardship and financial burden. In light of these circumstances, the petitioner has approached this Hon’ble Court, seeking relief by way of quashing the impugned order dated January 4, 2020, and setting aside the penalty order dated May 21, 2019. The petitioner submits that the impugned orders are not sustainable in law and are liable to be quashed to ensure justice and fair play. Therefore, the petitioner prays for the issuance of an appropriate writ, order, or direction to quash the impugned orders and provide necessary relief.