Calcutta HC: No GST Penalty for Goods Description Mismatch Without Tax Evasion Intent

The case is concerned with the detention of goods under the GST platform. The appellant Ashok Sharma contested the Show cause notices (SCN) and penalty orders furnished via the tax authorities, alleging erroneous detention of his goods and vehicle.

The dispute emerged over whether the goods carried matched the invoices and whether there was an objective to evade the taxes. It was claimed by the department that the goods in the vehicle were not the same as those declared in the invoices, explaining the penalty and detention under Section 129 of the CGST Act, 2017.

However, the physical verification verified the weight and classification of the goods were as per invoices, with no factual discrepancies. The inspecting administration conducted a detailed inquiry into product specifications beyond what was cited in the invoices, which the court considered unnecessary.

It was carried by the Calcutta High Court that there was no proof of tax evasion objective and that invoking section 129 for the detention and penalties was not explained.

It set aside the appellate orders and original tax authorities’ orders permitting the plea. The appellant was granted the right by the court to ask for a refund of the pre-deposit made in the process of appeal. Also, it sought the release of the detained goods and vehicle within four days of receiving the court order.

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The same decision supports the fairness of the GST enforcement outlining that the authorities should secure a factual basis before confining the goods and levying the penalties.

Advocate Himangshu Kumar Ray represented the taxpayer.