Petitioner | Metenere Ltd. |
Respondent | Union of India & Others |
Decision by | Allahabad High Court |
Date of order or Judgement | 17-December-2020 |
Citation no. | 2020 (12) GSTPanacea 1 HC Allahabad |
Hon’ble Judge | Justice Pankaj Bhatia |
Decision | In Favour of Assessee |
Order of Confiscation of Goods & Penalty Set Aside. None of the ingredients required for confiscation existed and thus, the confiscation itself was wholly arbitrary and illegal. The penalty has been imposed is in violation of Section 122
Order of Confiscation of Goods & Penalty-Facts of the Case
Order of Confiscation of Goods & Penalty-The Petitioner was engaged in manufacture of lead ingots falling under GST.
Department visited the factory premises and passed an order of detention detaining 12,979 metric tonnes of the entire stock of the petitioner. It is alleged that the said stock included the stock manufactured prior to enforcement of GST.
The petitioner was given an option of redeeming the confiscated goods on payment of redemption fine amounting to ₹ 12 crores in terms of the provisions of Section 130 (2) of the Act.
In addition a penalty of ₹ 19,43,89,804/- was imposed.
Also a penalty amounting to ₹ 50,000/- was imposed on the Managing Director.
The petitioner herein preferred an appeal against the said order whereby the appeal filed was rejected and the order impugned in the appeal was confirmed. Aggrieved against the said two orders passed against the petitioner, present writ petition has been preferred as the Tribunal envisaged under the GST Act has not be constituted.
Argument Before Court
Order of Confiscation of Goods & Penalty-Petitioner’s Contention
Order of Confiscation of Goods & Penalty-The records of GST were not available in the factory premises as the same was kept at the head office of the petitioner situated at Ghazipur.
No document showing unaccounted cash was found.
Allegations levelled were wholly baseless inasmuch as it was throughout the case of the petitioner that all the records were maintained at the principal place of business.
Documents in the electronic form were stored in the computer, however, the same could not be given to the respondent authorities on their visit as the internet was not functional on the said date.
There is no allegation or averment with regard to evasion of duty nor has any exercise been conducted by the department to establish and ascertain the duty evaded.
The quantum of penalty that could have been imposed for violation of not keeping the documents at the manufacturing premises could not exceed ₹ 10,000/- inasmuch as no exercise for quantifying the “tax evaded”.
Neither any allegation with regards to the issuance of invoices nor is there any allegation with regard to receiving of the payment.
No “reason to believe” for the exercise of powers under Section 66 were ever recorded.
Order of Confiscation of Goods & Penalty-Respondent’s Argument
Order of Confiscation of Goods & Penalty-The respondent, has argued that the orders passed against the petitioner is wholly justified inasmuch as goods not been found on the records, which are liable to be maintained under section 35.
Advocate appearing for the respondent said that the principal place of business was mentioned at Noida, although, the counsel for the petitioner has filed a registration certificate showing the principal place of business at Delhi.
Documents were required to be maintained electronically and the assessee is required to produce the relevant records on being asked to do so and recorded and that the petitioner failed even to produce and submit required accounts.
Allahabad High Court Held
Order of Confiscation of Goods & Penalty-The Hon’ble High Court held that there is no finding to the effect that any supply was made with an intent “to evade payment of tax” as is required under Section(i) of Section 130 (1).
There is nothing on record to establish that the petitioner did not account for any goods on which he is liable to pay tax under the Act.
None of the ingredients which are required for confiscation existed in the present case and thus, the confiscation itself was wholly arbitrary and illegal.
The only allegations are that the petitioner has not maintained the Book of Accounts secondly, the penalty has been imposed holding the Petitioners conduct in violation of Section 122 and thirdly, no exercise for quantification of the tax evaded has been done in pursuance to the powers conferred under Section 35 (6) read with Section 73 or 74 of the Act.
In above situation against the Petitioner, the maximum penalty that could be imposed upon the petitioner is ₹ 10,000/-.
To clarify, Order of confiscation of goods and the penalty imposed upon the petitioner passed by the Additional Commissioner, dated 28-5-2019 is set aside and the total penalty imposed upon the petitioner is quantified at Rs.10,000.
It is further clarified that as no writ petition has been filed by the Managing Director, I am not touching the penalty imposed upon him.
The writ petition is allowed in part on the terms as recorded above.
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