Allahabad High Court: Tax Invoice, E-Way Bills & Bilty Constitute Valid Documents for Ownership Title to Goods in Transit

Allahabad High Court: Tax Invoice, E-Way Bills & Bilty Constitute Valid Documents for Ownership Title to Goods in Transit

The Allahabad High Court has quashed the penalty order passed in Form MOU-09 under Section 129(1)(b) of the Goods and Services Tax Act, 2017 (GST Act) as the Revenue Department had failed to establish the intention of the petitioner to evade tax as per the per-requisite for imposition of penalty under Section 129 of the Act.

The division judge’s bench comprising of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava found in the present case that goods in transit were duly accompanied by the tax invoice, e-way bill, and bilty and therefore, observed, “The E-way Bills being the documents of title to the goods were accompanying the goods hence, the conclusion of the revenue that the petitioner was not the owner of the goods is patently erroneous. Consequently, the penalty proceedings were liable to be initiated under Section 129(1)(a) and not 129(1)(b) as has been done in the present case.”

In the present case, the petitioner had challenged the penalty order passed by the Assistant Commissioner in Form MOU-09 under Section 129(1)(b) of the Goods and Services Tax, 2017. The order imposed a penalty of Rs. 48,53,940 by not treating the petitioner as the owner of goods.

The petitioner argued that the goods were duly accompanied by the tax invoice, e-way bill, and bilty issued in the name of the petitioner as the consignor, and the goods were in transit through the State of U.P. during their movement from Kolkata to New Delhi. The petitioner claimed that there was no intention to evade tax.

The petitioner submitted that he was the owner of the goods and was ready and willing to deposit a penalty under protest under Section 129(1)(a) to get the goods released, considering the perishable nature of the goods and the substantial diminishing of their value with the onset of monsoons.

The department contended that the petitioner has rightly been held not to be the owner of the goods and that the penalty has rightly been imposed upon the petitioner under Section 129(1)(b).

The bench placed reliance on the decision of the Allahabad High Court in the case of M/s Sahil Traders vs. State of U.P., in which it was held that in the face of the tax invoice and the E-way bill produced by the petitioner, the goods may not have been treated as not traceable to a registered dealer.

The Court set aside the penalty order and directed the department to pass a fresh order treating the petitioner as eligible for the benefit of Section 129(1)(a) of the GST Act.