While quashing the penalty under Section 129(1)(b) of the CGST Act, imposed upon the petitioner by treating it as not being the owner of the goods, the Allahabad High Court clarified that once the petitioner’s name was found mentioned in the invoice and it has approached the authorities concerned for release of those goods, then Clause No.6 in Circular No.76/50/2018-GST dated December 31, 2018 shall apply to the petitioner and he would be considered as deemed owner of those goods.
On the issue of suspension of the GST registration of the petitioner by the authority concerned, after detention, on the ground that no business activities were carried out at the principal place of business of the petitioner, the Division Bench comprising Justice Shekhar B. Saraf and Justice Praveen Kumar Giri ruled that the absence of any activity at the principal place of business of the petitioner by itself is no basis to presume that fake invoices were issued to the petitioner and he was not the owner of the goods.
Essentially, the petitioner’s goods were seized and confiscated, and a penalty was imposed upon him u/s 129(1)(b) of the CGST Act simply because the petitioner had replied to the show cause notice through its registered email on the portal itself and did not appear in person. The Bench disregarded this action as tenuous and emphasized that a reply by way of the registered email cannot be held against the taxpayer. The Bench found that it is not the case of the Department that the petitioner was summoned and thereafter he did not appear.
Thus, when the petitioner has replied by way of the registered email through the portal, no adverse inference can be drawn against him, and the Court set aside the impugned order with a direction to the authority concerned to grant an opportunity of hearing to the petitioner and thereafter pass a reasoned order as per law, keeping in mind the principle laid down in M/s Halder Enterprises v. State of U.P. and others [2024 (2) ADJ 660 (DB)], wherein the issue with regard to imposition of penalty to be under Section 129(1)(a) and 129(1)(b) of the CGST Act, were discussed.
Appearances:
Petitioner: Advocate Suyash Agarwal
Respondent: Chief Standing Counsel
