GST | ‘Cannot Go Beyond Your Pleadings’: Allahabad High Court Refuses To Quash Penalty Order Under Section 129

The Allahabad High Court, on Wednesday, refused to quash penalty order passed under Section 129 of the Goods and Service tax Act, 2017 on the ground that petitioner cannot be permitted to argue the case without there being any pleading in support of his arguments.

The Court held that the petitioner had failed to make a specific averment in the pleadings before the writ Court regarding ‘no intention to evade tax’ when the same was recorded in the impugned order. Further, the petitioner had given up the right to file rejoinder when the respondent had specifically stated in its counter affidavit that there was intention to evade tax.

“Once the finding of fact, which has been recorded against the assessee has not been assailed in the present writ petition, the petitioner cannot be permitted to argue the case beyond the pleadings. In view of the aforesaid facts, the case law as well as circular relied upon by the petitioner are of no help to him,” held Justice Piyush Agrawal.

Factual Background

Goods of the petitioner were being transported from New Delhi to Telangana when they were intercepted at Agra. After physical verification of the goods, it was found that part B of the e-way bill accompanying with the goods, was not filled on which notice was issued proposing to impose tax at 18 % and equal amount of penalty. Goods were released upon deposit of the amount and Form GST MOV 09 under Section 20 of IGST read with Section 129 (3) of CGST Act was passed on grounds that part B of e-way bill was not filled, hence, seizure of goods was valid. Appeal filed against the penalty order was dismissed.

Relying on various judgments of the Allahabad High Court, counsel for petitioner contended that authorities should not have seized the goods on technical glitches as the goods in question were sold by one registered dealer to another registered dealer and were accompanied by genuine tax invoices, GR, e-way bill. It was contended that Part-B of the e-way bill was to be completed by the transporter, proceedings could not have been initiated against the petitioner. Lastly, it was submitted that there was no finding regarding intention to evade tax.

Per Contra, counsel for respondents argued that e-way bill was not complete which was a violation of the GST Act, hence the proceedings were valid. Further, the petitioner had failed to specifically specify the circumstances under which the e-way bill was not filled. It was also submitted that the petitioner had not specifically rebutted the findings of the impugned order, only general averments have been made. The petitioner also did not rebut any factual averments made by respondent in the counter affidavit hence no interference is called for in the impugned order, it was submitted.

High Court Verdict

The Court observed that regarding argument of the petitioner that there was no intention to evade tax, no pleading had been taken in the writ petition. Although in appeal the petitioner had raised the ground, however, it was not raised in the pleadings before the writ Court. The Court held that the petitioner could not be permitted to go beyond the pleadings.

The Court relied on Bachhaj Nahar Vs.Nilima Mandal and another, wherein the Supreme Court held

“When there is no prayer for a particular relief and no pleadings to support such a relief, and when defendant has no opportunity to resist or oppose such a relief, if the court considers and grants such a relief, it will lead to miscarriage of justice. Thus it is said that no amount of evidence, on a plea that is not put forward in the pleadings, can be looked into to grant any relief.”

Further reliance was placed on decision of Allahabad High Court in Shri Shiv Prakash Vs. Additional District Judge and the decision of Supreme Court in Bharat Singh and others vs. State of Haryana and others to hold the petitioner cannot argue his case beyond the pleadings made in the writ petition.

The Court noted that in the counter affidavit it had been specifically stated that there was intention to evade tax on part of the petitioner. However, since the petitioner chose to not file a rejoinder to rebut the specific averment, the petitioner cannot be permitted to go beyond the pleadings.

Accordingly, the writ petition was dismissed.

Case Title: M/S Millennium Impex Pvt. Ltd. v. Additional Commissioner Grade-2 (Appeal) - I State Tax, Noida And 2 Others [WRIT TAX No. - 721 of 2020]

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