Headnote:

WRIT TAX No. - 854 of 2023

Case: M/S Bhawani Traders v. State of U.P. and Another

Court: Chief Justice's Court

Date of Order: 24.7.2023

Subject: Goods and Services Tax Act, 2017 - Section 129(1)(a) and Section 129(1)(b) - Penalty order -
Consignor's liability during the movement of goods - E-way bills as documents of title to goods -
Petitioner's claim as the owner of goods - Writ petition allowed.

Summary:

The writ petition (Writ Tax No. 854 of 2023) has been filed by M/S Bhawani Traders against the State
of U.P. and Another, challenging the penalty order dated 17.06.2023 passed by the Assistant
Commissioner (In-charge) Mathura, Respondent No.2, under Section 129(1)(b) of the Goods and
Services Tax Act, 2017. The penalty imposed amounts to Rs.48,53,940/-. The issue at hand is whether
the petitioner can be treated as the owner of the goods during their transit through the State of U.P.

The petitioner contends that they are the rightful owner of the goods and had duly accompanied the
goods with tax invoices, e-way bills, and bilty during their movement from Kolkata to New Delhi,
without any intention to evade tax. The respondent's representative acknowledges that the intention
to evade tax is a prerequisite for imposition of penalty under Section 129.

The Court carefully considers the arguments of both parties and observes that the E-way bills, being
documents of title to the goods, were accompanying the goods during transit. Consequently, the
conclusion reached by the revenue that the petitioner was not the owner of the goods is erroneous.
The penalty proceedings should have been initiated under Section 129(1)(a) instead of Section
129(1)(b) as done in the present case.

In light of the above findings and relying on its previous decision in Writ (Tax) No.178 of 2023 (M/s
Sahil Traders Vs. State of U.P.), dated 25.05.2023, which is squarely applicable to the present case,
the Court sets aside the impugned penalty order dated 17.06.2023 passed in Form MOU-09 under
Section 129(1)(b) of the Goods and Services Tax Act, 2017.

Accordingly, the writ petition is allowed, and Respondent No.2 is directed to pass a fresh order
treating the petitioner as eligible for the benefit under Section 129(1)(a) of the Act.

Furthermore, the petitioner is granted the liberty to avail any remedy available to challenge the
assessment order, if deemed necessary.

TLD (Tentative Legal Decision):

The Chief Justice's Court, in WRIT TAX No. 854 of 2023, allowed the writ petition filed by M/S
Bhawani Traders against the State of U.P. and Another, challenging the penalty order dated
17.06.2023, passed by the Assistant Commissioner (In-charge) Mathura, imposing a penalty of
Rs.48,53,940/- on the petitioner under Section 129(1)(b) of the Goods and Services Tax Act, 2017.
The Court held that the petitioner is the owner of the goods and the penalty proceedings should
have been initiated under Section 129(1)(a) instead of 129(1)(b) as done in the present case. The
penalty order was set aside, and the Court directed Respondent No.2 to pass a fresh order treating
the petitioner as eligible for the benefit under Section 129(1)(a) of the Act. The judgment relied on
the precedent set in Writ (Tax) No.178 of 2023 (M/s Sahil Traders Vs. State of U.P.), decided on
25.05.2023. The order was dated 24.7.2023.