FACTS & SUBJECT MATTER: 
The brief facts of the case are that the petitioner is having GSTIN No. 19AAECS9421J1ZZ having its registered Office at 2nd Floor, 5 SS Chamber, Chittaranjan Avenue, Jamuria, West Bengal and engaged in the business of manufacture and sale of industrial grade steel components, i.e., channel, beams, etc. The petitioner through tax invoice dated 17.11.2021 transported 4 MT, 10.800 MT and 6.970 MT of steel channels of different dimensions and 4 MT each of steel beams of different dimensions to M/s Maa Ambey Steels. The said goods were accompanied with tax invoices, e-way bill and GR's. The goods were intercepted on 19.11.2021 at Maharajpur, Kanpur and on verification, it was found that e-way bill no. 8211 9011 4043 had been cancelled by the purchasing dealer; whereupon, form GST MOV 06 dated 22.11.2021 was prepared and the goods were seized. Subsequently, GST MOV 07 dated 22.11.2021 was prepared seeking response from the petitioner. The petitioner submitted the response that all e-way bills were duly filled up and the petitioner was not aware about the cancellation of e-way bills by the purchasing dealer, but the petitioner submitted that the goods in question were sold by the registered dealer to a registered purchasing dealer and were accompanied along with genuine documents. Dissatisfied with the reply, the impugned order dated 25.11.2021 was passed under section 129(3) of the CGST Act imposing penalty. Feeling aggrieved by the aforesaid order, the petitioner preferred appeal, which has also been dismissed by the impugned order dated 18.06.2022. Hence, the present writ petition.

CASE LAW: M/S Shyam Sel And Power Limited Vs State Of U.P. And 2 Others (WRIT TAX No. - 603 of 2023, Date 05-10-2023)

ISSUE : Whether Intent to evade payment of tax is mandatory for invoking the proceeding u/s 129(3) and 130?

HELD: The Hon’ble Allahabad High Court held as under:
(1) For invoking the proceeding under section 129(3) of the CGST Act, section 130 of the CGST Act was required to be read together, where the intent to evade payment of tax is mandatory, but while issuing notice or while passing the order of detention, seizure or demand of penalty, tax, no such intent of the petitioner was observed. Once the dealer has intimated the attending and mediating circumstances under which e-way bill of the purchasing dealer was cancelled, it was a minor breach. The authority could have initiated proceedings under section 122 of the CGST Act instead of proceedings under section 129 of the CGST Act. Section 129 of the CGST Act must be read with section 130 of the said Act, which mandate the intention to evade payment of tax. Once the authorities have not observed that there was intent to evade payment of tax, proceedings under section 129 of the CGST Act ought not to have been initiated, but it could be done under section 122 of the CGST Act in the facts & circumstances of the present case. It is also not in dispute that after release of the goods, the same were sold to P.L. Trading Company.
(2) Section 129 of the CGST Act deals with detention, seizure and release of goods in case violation of the provisions of the CGST Act is found. Section 130 deals with confiscation of goods or conveyance and levy of penalty. Both the sections revolve around a similar issue and provide for the proceedings available at the hands of the proper Officer upon him having found the goods in violation of the provisions of the Act, Rule 138 of the Rules framed under the CGST Act being one of them. Upon a purposive reading of the sections, it would sufice to state that the legislation makes intent to evade tax a sine qua non for initiation of the proceedings under sections 129 and 130 of the CGST Act.
(3) This aspect is no more res integra and the same stands finalized in the judgement of the Apex Court in M/s Satyam Shivam Papers Private Limited (supra); wherein, it has been categorically stated that:- “As notices hereinabove, on the facts of this case, it has precisely been found that there was no intent on the part of the writ petitioners to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioners.”
(4) Recently, the Division Bench of this Court in Writ Tax No. 600 of 2022 (M/s Gobind Tobacco Manufacturing Company & Another Vs. State of U.P. & Others) quashed the levy of penalty under section 129 of the GST Act with heavy costs upon the Revenue for abuse of their powers.
(5) In view of the aforesaid facts & circumstances of the present case as well as the law laid down by the Apex Court and this Court, as aforesaid, the writ petition succeeds and is allowed. The impugned order dated 18.06.2022 passed by the respondent no. 2 as well as the impugned order dated 25.11.2021 passed by the respondent no. 3 are hereby quashed.