1. Pact Machines (P.) Ltd.v. Assistant State Tax Officer (Intelligence)  113 taxmann.com 221 (Kerala)
Opportunity of Hearing to be provided before passing order confirming demand of tax and penalty
Facts: The challenge in the writ petition is against order of detention, and adjudication order that followed, imposing a liability to tax and penalty on the petitioner under the CGST and SGST Acts. The detention was made on the ground that incharge of the goods had failed to produce e-Way Bill as per Rule 138 of the CGST and SGST Rules, 2017, at the time when the vehicle was intercepted by the authorities, and further it was found that the vehicle was plying in a wrong direction when compared with the destination shown in the invoice.
Contention of Petitioner-E-Way Bill was actually available with the driver of the vehicle and the findings in the detention notice are contrary to facts. Simultaneous with issuance of detention notice, order confirming demand of tax and penalty was also passed, without affording petitioner an opportunity of being heard.
Held: It was held by the Court that at the time of detention, driver of vehicle did not produce any e-Way Bill, either manual or electronic, corresponding to goods that were carried on in vehicle. It was further pointed out that a statement was given by the driver before the authorities wherein he had stated that there was no e-Way Bill with him. Therefore, prima facie there appeared to be a justification to the Court for detention of the vehicle.
However, there was no opportunity granted to petitioner to rebut inferences drawn by authorities while detaining goods, through a hearing afforded to petitioner before passing order confirming demand of tax and penalty on petitioner. Therefore, order was quashed and respondent was directed to pass fresh orders.
2. Smeara Enterprises v. State Tax Officer  111 taxmann.com 511 (Kerala)
Deposit of 10% of disputed tax as a condition for maintaining appeal cannot be a basis for direction to release goods without any security
Facts: An appeal had been preferred by the petitioner against the order of penalty stating that 10% of disputed tax was paid as a condition for maintaining appeal. It was further prayed, for release of goods pending disposal of appeal.
Held: It was held by the Court that mere pendency of an appeal cannot be basis for a direction to release goods without any security, since non-payment of security in respect of the goods can independently lead to a confiscation of goods under Section 130 of CGST Act. Accordingly, writ petition was disposed of by directing to consider and pass orders on appeal within a period of three months, after hearing the petitioner. The petitioner may seek a release of goods by furnishing the necessary Bank guarantee for the tax and penalty amounts confirmed against him, pending disposal of the appeal or in the alternative, await the outcome of the confiscation proceedings under the Act.
3. Kesar Farm v. Additional Commissioner of Commercial Taxes (Enforcement Bengaluru)  112 taxmann.com 374 (Karnataka)
Order passed for detention of goods and vehicle under section 129 is appealable under Section 107
Facts: The petitioner assailed order of demand of tax and penalty under section 129(1)(b) of CGST Act and, KGST Act read with section 20 of IGST Act as well as detention order dated 23.09.2019 passed under section 129(1) of CGST Act read with section 20 of IGST Act and the demand notices inter alia seeking for other consequential reliefs.
Held: An attempt was made by petitioner to contend that order impugned is not appealable under provisions of the Act bur the same was negated by the Court for reason that section 107 of Act explicitly makes it clear that, any person aggrieved by any decision or order passed under the Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person. It was further clarified by section 121 which deals with non-appealable decisions and orders. In terms of Section 121, no appeal shall lie against any decision taken or order passed by an officer of central tax if such decision taken or order passed relates to any one or more of the following matters, namely:—
- an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer; or
- an order pertaining to the seizure or retention of books of account, register and other documents; or
- an order sanctioning prosecution under this Act; or
- an order passed under section 80.
It is not in dispute that the case on hand would not fall in any of the aforesaid clauses mentioned in section 121 of the Act. Hence, without going into merits or demerits of the case, court relegated the petitioner to the Appellate Authority to avail the alternative remedy of appeal.
4. Insha Trading Company v. State of Gujarat  112 taxmann.com 175 (Gujarat)
Preparation of Reports in Part A of Form GST EWB-03, Form GST MOV-04 or Part B of Form EWB-03 imperative to prove physical inspection being carried out, No confiscation under section 130 of CGST Act be carried out on reasons which are not in any way connected with the transportation of goods and independent actions can be taken in other provisions
Facts: The petitioner was registered under GST and Ramgarhia Trading Company, which was located at New Delhi and was registered under GST Act, placed an order for brass electrical parts through Jay Gujarat Goods Carrier. Truck was intercepted by State Tax Officer on 14.01.2019 at 00:30 a.m. at Soyal Toll Gate. The driver of the truck had produced documents relating to goods which were being transported; however, State Tax Officer detained truck on the ground that genuineness of goods in transit (its quantity etc.) and/or tendered documents requires further verification. Accordingly, on 14.01.2019, the State Tax Officer issued an order in Form GST MOV-01 recording statement of driver as well as an order for physical verification/inspection of conveyance and goods and documents in Form GST MOV-02. Thereafter, by an order dated 14.01.2019, passed under section 129(1) of CGST Act, the truck as well as goods contained therein was ordered to be detained. The ground stated in order of detention as translated into English reads thus: “On a perusal of the details in bilty No.15615, it prima facie being disproportionate, vehicle has been detained for verification of the same”. Order of physical verification in Form GST MOV-02 and the order under section 129(1) of the CGST Act have been passed on the same day, that is, on 14.01.2019.
Thereafter, by an order dated 29.01.2019, passed in Form GST MOV-09; the petitioner was called upon to pay the tax and penalty as computed therein. Thereafter, a notice came to be issued in Form GST MOV-10 under section 130 of the CGST Act for confiscation of the conveyance and goods in question on the grounds that on a perusal of the details in bilty No.15615, it prima facie being disproportionate, the same required verification; and that upon primary examination of the dealer online, it is found that in December 2018, he has generated 42 e-way bills wherein IGST of Rs. 3,64,30,800/- is shown, and that it appears that either the dealer has not paid such amount or the purchases are not genuine. Thereafter, by the impugned order dated 08.04.2019, the goods and conveyance are ordered to be confiscated in exercise of powers under section 130 of the CGST Act.
Contention by Respondent- After conveyance in question was intercepted, State Tax Officer had conducted search at business premises of the petitioner on 21.01.2019 as well as on 22.01.2019 and found that the petitioner did not maintain any stock or books of accounts at his business premises. It was further submitted that the petitioner and the transporter – Jay Gujarat Goods Carrier are working in collusion with each other and that, the petitioner is stated to have purchased the goods which were being transported from parties located at Kolkata, West Bengal; however, upon verification by the GST Department, it was found that such parties are not in existence. It was submitted that, therefore, it appears that the petitioner has purchased the goods from the local market without paying any local tax and is selling the same to the dealers in New Delhi mentioning State tax in the invoice and thereby, claiming input tax credit. It was submitted that the authority under the GST Act had issued DRC-1 under section 74 of the GST Act on 25.04.2019 and the petitioner is facing prosecution for wrongfully availing the benefit of input tax credit and a charge-sheet has been filed against the petitioner on 05.10.2019 for the offence punishable under sections 132(1)(c) as well as 132(1)(d) of the GST Act. It was submitted that in the light of what has been unearthed during the course of investigation, the order of confiscation is justified. It was submitted that the petitioner has no other property except residential premises, the value whereof, is not commensurate with the amount involved in the entire fraud that has been committed by the petitioner in collusion with Jay Gujarat Goods Carrier. It was submitted that, therefore, the respondents are wholly justified in confiscating the conveyance with the goods contained therein and that, the petition being devoid of any merits, deserves to be dismissed.
1. No Discrepancy in the Documents carried along with the Vehicle-It was held by the Court that conveyance in question was transporting goods being brass electrical parts from Jamnagar to Delhi. The consignor, viz. the petitioner, and the consignee are duly registered under the relevant GST Acts. On 14.01.2019, when the conveyance came to be intercepted, the driver of the conveyance had duly produced the e-way bill as well as the invoice in connection with the goods that were transported. On behalf of the respondents, nothing has been pointed out to show that there was any discrepancy in the e-way bill or the tax invoice. Under the circumstances, in the light of the instructions issued by the Board in the Circular dated 13.04.2018, since, upon verification of the documents no discrepancies were found, the conveyance was required to be allowed to move further.
2. Even though No discrepancy found in Documents, but still officer can detain the vehicle for physical verification- If the officer desired to carry out physical verification of conveyance, goods and documents, it was still permissible for him to detain the conveyance, and accordingly, third respondent issued an order in Form GST MOV-02 for physical verification/inspection of the conveyance, goods and the documents. The said order passed on the ground that the genuineness of the goods in transit (its quantity etc.) and/or tendered documents requires further verification.
However, when conveyance was detained for the purpose of inspection, it was incumbent upon the officer to prepare a report in Form GST EWB-03 and upload the same on the common portal within twenty four hours from issuance of Form GST MOV-02 and upon completion of physical verification, he was further required to prepare a report in Form GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance and thereafter record the final report of the inspection in Part B of Form GST EWB-03 within three days of such physical verification.
3. No Compliance by Officer of procedure laid down for EWB-03, MOV-04, Part B of EWB-03- It was observed by the Court thatin facts of present case, no such reports in Part A of Form GST EWB-03, Form GST MOV-04 or Part B of Form EWB-03 have been prepared. Thus, court observed that though vehicle was detained for the purpose of carrying out inspection, no such inspection was carried out or that upon physical verification no discrepancy was found in the conveyance/goods or documents. In facts of case, despite the fact that no discrepancy appears to have been found after the inspection of the goods and conveyance, the proper officer has not issued a release order in Form GST MOV-05. Further, despite the fact that Form GST MOV-02 was issued, without verification/inspection of the goods and conveyance, State Tax Officer issued an order of detention in Form GST MOV-06 on the same day, that is, on 14.01.2019, on the ground that upon a perusal of the details in bilty No.15615, the same being disproportionate, the vehicle is required to be detained for verification of the same.
4. Affidavit submitted by Respondent does not in any way contain details about the discrepancy observed after verification-The Court observed that in affidavit-in-reply, there was not even a whisper regarding any discrepancy having been found in bilty No.15615 after verification, despite the fact that conveyance had been detained for that purpose.
Thus, Court held that there was no valid ground for detention of vehicle in question on the part of respondents. Under the circumstances, question of calling upon petitioner to pay tax, penalty and fine, as computed by the respondent in the order of demand of tax and penalty in Form GST MOV-09 dated 29.01.2019 does not arise.
5. Reason to Confiscate the Goods has nothing to do with the Transportation of Goods-It was observed by Court thatreason for passing order for confiscation has got nothing to do with reasons for which, goods and conveyance were initially detained. The reasons for issuance of the notice for confiscation under section 130 of the CGST Act in Form GST MOV-10 are that upon preliminary verification of the dealer online, 42 e-way bills have been generated in December 2018, wherein, IGST has been shown to Rs. 3,64,30,800/- and it appears that, dealers has not paid the same or that the purchases are not genuine. The Court observed that if that was the case, nothing prevented respondents from taking appropriate action against petitioner in accordance with law under the relevant provisions of the CGST Act. However, when conveyance in question was carrying goods which were duly accompanied by documents and no discrepancy was found in connection therewith, there was no reason for the officer to confiscate the same. The impugned order of confiscation passed by the third respondent under section 130 of the CGST Act, therefore, cannot be sustained.
For the forgoing reasons, the petition was held to be succeeded and therefore allowed.
5. Livguard Energy Technologies (P.) Ltd. v. State of Uttarakhand  112 taxmann.com 176 (Uttarakhand)
When provisions of CGST 2017 provide for release of goods only on furnishing a bank guarantee, it would be wholly inappropriate to issue any direction contrary thereto
Facts: The appeal under Chapter VIII Rule 5 of Allahabad High Court Rules, was preferred against order passed by Single Judge in Livguard Energy Technologies (P.) Ltd. v. State of Uttarakhand [Writ Petition (MS) No.3178 of 2019, dated 15-10-2019] whereby it was held that invoking jurisdiction of Writ Petition by the appellant-writ petitioner against show-cause notice was premature and appellant should give a reply to show-cause notice to concerned authorities furnishing valid reasons as to why delay had been caused.
Held: The respondents were directed to consider the original reply, and additional reply submitted by the petitioner, and pass a reasoned order. Further, when the court asked whether the writ petitioner is willing to deposit an unconditional bank guarantee, from a nationalized Bank, for the said amount; it was submitted that such a condition is stipulated in the provisions of the 2017 Act itself, and it is only because the appellant-writ petitioner is not in a position to do so, has he invoked the jurisdiction of this Court seeking its indulgence to direct release of the detained vehicle and stock on the appellant-writ petitioner furnishing an indemnity bond.
It was further held by the Court that since it is admitted that GST 2017 provides for release of goods only on furnishing a bank guarantee, it would be wholly inappropriate for them to issue any direction contrary thereto. Therefore, appellant-writ petitioner’s request for release of the vehicle and the goods on merely furnishing an indemnity bond was not acceded by the Court. It was further observed that interference in an intra-court appeal would be justified only if order under appeal suffers from a patent illegality and there was no such infirmity in order under appeal.