2024 (4) TMI 1271 - HC - GST

Levy of penalty u/s 129(3) of the Uttar Pradesh Goods and Services Act 2017 - discrepancy in relation to the HSN qualification described in the tax invoice - stock transfer - HELD THAT - In the case of stock transfer there is no liability of any payment of tax. Accordingly there can be no intention to evade tax whatsoever. In the present case the authorities did not dispute the fact that the movement of the goods was in relation to stock transfer. Accordingly penalty imposed under Section 129(3) of the Act is without any basis in law and is liable to be set aside. The impugned orders dated February 8 2024 and June 28 2023 are quashed and set aside. The writ petition is allowed.

Summary

The Allahabad High Court, exercising jurisdiction under Article 226 of the Constitution, quashed the penalty imposed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017. The petitioner challenged orders dated June 28, 2023 and February 8, 2024, contending that the sole discrepancy concerned the HSN code in the tax invoice related to a stock transfer, which was undisputed by authorities. Relying on precedents from coordinate benches (M/s Vacmet India Ltd. v. Additional Commissioner and M/s Anchor Health and Beauty Care Pvt. Ltd. v. State of U.P.), the Court held that "in the case of stock transfer, there is no liability of any payment of tax" and thus "there can be no intention to evade tax whatsoever." The Court found the penalty under Section 129(3) to be "without any basis in law" and accordingly set aside the impugned orders, allowing the writ petition and directing refund of any deposited penalty.