In Civil Writ Jurisdiction Case No.4924 of 2023 -PAT HC- Patna HC quashes penalty imposed on petitioner company under Section 129(3) of CGST Act, cites violation principles of natural justice as Notice and Penalty Order issued simultaneously
Chief Justice K. Vinod Chandran & Justice Madhuresh Prasad [24-04-2023]

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Read Order: M/s Sangam Wires v. The State of Bihar and Ors

 

Chahat Varma

 

New Delhi, June 20, 2023: The Patna High Court has ruled in favour of M/s. Sangam Wires (petitioner) by quashing the penalty imposed on them under Section 129(3) of the Central Goods and Services Tax Act (CGST Act). The court found that the notice issued under Section 129(1)(a) was a mere formality as no time or opportunity was provided to the petitioner before the penalty was imposed on the same day, which violated the statutory requirement under Section 129 of the Act and the principles of natural justice.

 

Briefly stated, the petitioner’s vehicle was intercepted on Gaya-Dobhi Road. The e-way bill (EWB) was found to be expired. Since the goods were in movement without a valid e-way bill, the proper officer, under the CGST Act levied a penalty on the petitioner vide order dated 28.03.2022. The same was preceded by issuance of a notice dated 28.03.2022, directing the petitioner to appear before the proper officer. The first appellate authority rejected the petitioner’s appeal.

 

Upon reviewing the notice under Section 129(1)(a) and the order imposing the penalty, the division bench of Chief Justice K. Vinod Chandran and Justice Madhuresh Prasad observed that both were issued simultaneously by the same authority on the same date. It was evident that the order imposing the penalty did not mention any record of the petitioner's appearance or hearing before the order was passed.

 

Consequently, the court directed that the matter be remanded to the Joint Commissioner of State Tax, Magadh Division, Gaya.

 

The court also acknowledged that the petitioner was eligible for a refund of 25 percent of the amount deposited for the appeal. Therefore, the court directed the proper officer to refund the amount to the petitioner within one week of the petitioner's appearance before the proper officer.

 

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