TMI Blog2023 (12) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 129 of the Act of 2017 has a requirement of issuance of notice with sub-Section (4) thereof, mandating the Adjudicating Authority not to pass an order of penalty without affording an opportunity of hearing to the defaulter. Compliance of principles of natural justice is inherent in any adjudicating proceedings unless specifically ousted by a statute. In the present case, Section 129 (3) and (4) of the Act of 2017 require compliance with the provisions of principles of natural justice prior to pronouncement of an order of penalty. Requirement of compliance with the principles of natural justice before passing an order of penalty ipso facto means that, the Adjudicating Authority has the jurisdiction to evaluate the merits of the defence taken and speak thereon. The mechanism provided under Section 129 of the Act of 2017 allows the Adjudicating Authority to accept the explanation given by a defaulter in given facts and circumstances and not to impose a penalty. By virtue of the authoritative pronouncement of the Supreme Court in Shriram Mutual Fund and Another [ 2006 (5) TMI 191 - SUPREME COURT ], Guljag Industries [ 2007 (8) TMI 344 - SUPREME COURT ] and Saw Pipes Limited [ 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 129 (3) of the West Bengal Goods and Services Tax Act, 2017. 2. Learned advocate appearing for the appellant has submitted that, the appellant generated a valid e-way bill for transportation of electrical switches manufactured as per the requirement of Arunachal Pradesh Government. The appellant was transporting the electrical switches for delivery at Arunachal Pradesh through a vehicle which had suffered mechanical failure. On such vehicle suffering mechanical failure, the goods have been transported to a new vehicle. He has contended that, the mechanical snag of the first vehicle was unforeseen and beyond the control of the appellant. The subsequent vehicle had been intercepted and detained. He has contended that, the appellant did not have any intention to evade tax. 3. Learned advocate appearing for the appellant has contended that, the Adjudicating Authority overlooked the grounds put forth in the reply to the show cause notice. He has pointed out that, the Adjudicating Authority did not allude to the grounds of defence raised by the appellant in reply to the show-cause notice. The Appellate Authority also did not allude to the same or to the grounds of appeal. 4. Learned advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforeseen eventuality namely, the consignor, consignee and the transporter. None of them had revalidated the e-way bill in respect of the goods concerned. He has contended that, revenue authorities are not required to establish mens rea or motive so far as Section 129 of the Act of 2017 is concerned. 8. In support of his contentions, learned advocate for the State has relied upon 2006 Volume 5 SCC 361 (Chairman SEBI vs. Shriram Mutual Fund and Another), 2007 Volume 7 Supreme Court Cases 269 (Guljag Industries vs. Commercial Tax Officer), 2011 Volume 7 Supreme Court Reports 934 (Commissioner of Central Excise, Chandigarh vs. M/s. Doba Steel Rolling Mills) and 2023 SCC OnLine SC 428 (State of Gujrat and Another vs. Saw Pipes Ltd.). 9. Appellant has claimed itself to be a manufacturer of electrical goods and to be registered under relevant statute in the State of Uttar Pradesh and under the provisions of the Central Goods and Services Tax Act, 2017. 10. Appellant has claimed that it entered into a contract with Flomore Limited of Uttar Pradesh for supply of specifically designed and customized electrical panel and ship them to the Department of Power, Government of Arunachal Pradesh t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eon has been endorsed when such notice was served physically on the driver on such date. 16. The appellant had submitted claim of ownership of the goods before the Respondent No. 1 by a letter dated June 22, 2022. The appellant had explained the chain of events leading up to the goods being found on the new vehicle. It had claimed that the e-way bill containing the registration number of the first vehicle was valid on the date of detention. The appellant has claimed that the letter dated June 22, 2022 is essentially a reply to the show cause notice. 17. The Respondent No. 2 had passed an order dated June 27, 2022 imposing penalty under Section 129 (3) against the appellant to the tune of 200 per cent amounting to Rs. 4,31,380. 18. The appellant had paid the amount of penalty being Rs. 4,31,280 without prejudice to its rights and contentions with regard to the demand. On payment of the penalty the goods and the vehicle had been released. 19. The appellant had thereafter preferred an appeal against the Adjudicating order dated June 27, 2022. Such appeal had been filed on June 13, 2022. A written submission had been filed on August 8, 2022. The appeal had been disposed of by an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way bill was made the same in all likelihood could not have been revalidated on the same day. 25. The Supreme Court in M/s. Doba Steel Rolling Mills (supra) has observed that a taxing statute should be strictly construed. It has also observed that the intention of the legislature is primarily to be gathered from the words used in the statute and once it is shown that the assesse falls within the letter of the law he must be taxed howsoever great the hardship may appear to the judicial mind to be. 26. In Pannalal Mahabir Prasad Another (supra), the Division Bench has considered the provisions of the West Bengal Sales Tax Act, 1994. In the facts of that case, it has been held that, there must be a motive established on facts or otherwise that a dealer had a motive to evade the payment of Sales Tax and that such motive gave rise to cause of action for the purpose of initiating penal proceedings. 27. Relevancy of motive in respect of imposition of tax liability to the extent that it results in civil liability has been examined by the Supreme Court in Shriram Mutual Fund and Another (supra), Guljag Industries (supra) and in Saw Pipes Limited (supra). The Supreme Court has held in such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after detention or seizure, shall be released, (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Mov - 07 being a notice under Section 129 (3) of the Act of 2017, was undated. The response dated June 22, 2022, thereto, has referred to a subject of GST Mov - 2 dated June 19, 2022. However, GST Mov 2 dated June 19, 2022 is not an order of detention. The order of detention is Form GST Mov -07 which has been undated in its soft version and a date of June 26, 2022 written on the left hand top corner on the hard copy thereof served on the driver of the vehicle. 34. It is trite law that, quoting of a wrong section or a wrong provision of law does not militate against the substance of the response. The response of the appellant is dated June 22, 2022 and is a response to the notice of show cause. The Adjudicating Authority has failed to allude to the response dated June 22, 2022 or the contents therein. The Adjudicating Authority did not apply its mind to the response. The Adjudicating Authority has proceeded mechanically to find that, there has been a violation of the Act of 2017 and therefore, the appellant was liable to penalty. 35. The Telengana High Court in M/s. Satyam Shivam Papers Pvt. Limited Anr. (supra) has held that, such a course of action is not available to an Adjud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent may have a defence of reasonable cause in non-compliance. He may have set up a defence of impossibility of performance and adherence to the tax regime leading up to the default. He may have suffered a supervening event unforeseen and unavoidable making the compliance with the tax regime impossible or burdensome. Such defences set up have to be considered by the Adjudicating Authority. In short, the regime of imposition of penalty as envisaged under Section 129 of the Act of 2017 does not automatically result in the penalty of a violation of the tax regime stipulated without the Adjudicating Authority alluding to and deciding on the defences, if any, set up, by passing a reasoned order thereon. 38. In the facts of the present case, e-way bill in respect of the goods transported was yet to expire when, the new vehicle had been detained. The explanation given by the appellant that, the driver of the old vehicle did not know the law and therefore did not comply with the same and did not inform the appellant about the same, should have been evaluated, in the facts and circumstances of the present case, by the Adjudicating Authority in light of the e-way bill being valid till then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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