GST: High Court Upholds Penalty for Unloading at Unregistered Place; Post-Facto GSTN Amendment Rejected

In a recent case, the Allahabad HC has rejected the petition filed by a registered dealer against a penalty under the GST Act. The court held that the company tried to fix its mistake only after the goods were detained.

The company, M/S Arora Auto Center, being a registered dealer, bought 100 pieces of inverters and UPS batteries to transport them from Gorakhpur to Muzaffarnagar. As per the invoice and the bilty, the goods were supposed to be unloaded at Ansari Road, Muzaffarnagar. However, since the goods were unloaded at a place different (Purani Ghans Mandi) from what was shown on the invoice, the goods were seized by the GST authority on 06.03.2020.

As per the company, it had taken place at Purani Ghans Mandi from the wife of the owner of the company through a notarized document on 29.02.2020. The company submits that it filed an application to amend the GST registration certificate to add Purani Ghans Mandi as another business location on 07.03.2020, which was a day after the goods were detained. The company contended that the amendment must take effect from the date of occurrence of the event warranting such amendment.

However, the standing counsel opposed the submissions made by the company, stating that the application for amendment of registration was filed a day after the goods were detained, which clearly shows that the company had framed this whole story for the release of goods, violating the provisions of Section 129 of the Act.

The High Court, after hearing both parties, observed that the agreement of an affidavit is not a registered document. The court stated that Section 129 of the Act of 2017 has a strict rigor and starts with a non obstante clause. Additionally, the court also observed that the amendment application was made after the goods were detained, not before or during transit. The court held that it was a “classic case” where the company made an amendment application just to escape from the penalty under the Act of 2017. Therefore, the High Court rejected the petition filed by the company.