Penalty Set Aside as Petitioner Deemed Owner Based on Invoice | HC

Facts of the Case

The petitioner, whose name was mentioned in the invoice accompanying the detained goods, was subjected to penalty proceedings under Section 129 of the CGST Act and the Uttar Pradesh GST Act. Upon detention of goods and conveyance in transit, the jurisdictional officer imposed penalty under Section 129(1)(b), treating the petitioner as a person other than the owner of the goods. The petitioner responded to the show cause notice via his registered email address, although no personal appearance was made before the authority. The authorities also noted that a subsequent field visit to the principal place of business of the petitioner revealed no business activity, and this was cited as grounds for treating the petitioner as not being the owner. The petitioner contended that since his name was clearly stated in the invoice and he had approached the authorities seeking release of the goods, he should be deemed the owner as per Clause No. 6 of Circular No. 76/50/2018-GST, dated 31-12-2018. The matter was accordingly placed before the High Court of Allahabad. 

High Court Held

The High Court of Allahabad held that in light of the petitioner’s name being present on the invoice and his proactive steps to secure release of the goods, Clause No. 6 of Circular No. 76/50/2018-GST, dated 31-12-2018 would squarely apply, and the petitioner must be deemed the owner for the purpose of Section 129. The Court ruled that the mere absence of activity at the principal place of business was insufficient to displace the statutory presumption arising from documentary evidence. It further held that the invocation of Section 129(1)(b) was legally unsustainable in such circumstances and that penalty under this clause could not be levied. Accordingly, the impugned order imposing penalty was set aside, with a direction to the jurisdictional authority to afford the petitioner an opportunity of hearing and thereafter pass a reasoned order. 

List Of Cases Cited

• Halder Enterprises v. State of U.P. — 2024 (80) G.S.T.L. 357/(2023) 13 Centax 144 (All.) — Referred [Para 4]