Orissa HC: Penalty U/S 129(1)(b) for Allegations of Fake ITC, Free Detained Vehicle After Payment

In a recent instance in which a car was seized on suspicion of fraudulent business operations and false ITC claims, the Orissa High Court ordered its release following payment of a penalty under Section 129(1) (b) of the GST Act, 2017.

The directions would have been obtained by Sunil Mishra who is the Additional Standing Counsel appearing for CT & GST that the vehicle has registration no OR15R3871 was blocked on the date 17.03.2023 Sergarh, Balasore near about 1.05 A.M. For further verification, the statement of the driver was recorded in Form-GST MOV-01 and was rendered to station the vehicle at office premises vide Form-GST-MOV-02.

Verification via the portal found that the consigner is been involved in bogus business activities and claiming bogus Input tax credit. Hence, a detention notice in Form GST MOV-06 was served on the driver directing him to station the vehicle at the office premises. The bonafideness of the consignor M/s. Mitigater Techsecure Pvt. Ltd was verified by the CT & GST Enforcement Unit, Bhubaneswar, and uncovered to be suspicious.

A show cause notice in Form GST-MOV-07 was imposed on the driver for show cause as to why the penalty under Section 129 (1)(b) shall not be levied through him. In absence of a reply, an order of demand was issued to the driver in Form-GST-MOV-09 vide order No. 301, dt.29.03.2023 raising a demand of Rs.9,57,600/- under Section 129 (3) of the GST Act.

Section 129(1) furnishes that any individual who would have an interest in the goods will be obligated under section 129 (1) (b). Specifically, a reading of section 129(6) shows that an individual transporting any goods or the owner of the goods is not able to file the tax amount and penalty as furnished in sub-Section (1) within 14 days of these seizures, the additional proceedings will be shown via the provision of section 130.

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While the authorities have said that the conveyance can be released upon payment of the fine specified in the demand order or upon presentation of a bank guarantee for an equivalent sum, it appears that the petitioner has not contacted them.

Behura, the petitioner’s attorney, commits to have the petitioner provide a bank guarantee for the same sum within two days so that the authority can release the vehicle.

When the applicant is not able to file the bank guarantee then the same shall be open to the opposite parties to confiscate the vehicle of the applicant, a Coram Comprising of Justice B R Sarangi and Mr Justice M S Raman carried.