FS Enterprise v. State of Gujarat [2019] 111 taxmann.com 179 (Gujarat)
Issue: Instructions issued by Board are binding in Nature; No FORM GST MOV-02 issued, No Part A of Form GST EWB-03 uploaded on common portal, No FORM GST MOV-04 issued and No Part B of Form GST EWB-03 uploaded on the common portal; Fresh grounds subsequent to passing of the order cannot be raised by the officer; No Requirement to incorporate details of goods being dealt in the Registration Certificate and thus no detention can be made on such ground
1. Facts: The truck along with the goods came were detained by State Tax Officer. The driver of the truck duly produced all documents relating to the goods including invoice, transport receipt and e-way bill. However, despite the fact that petitioner had complied with the procedure for movement of goods as stipulated under the GST Acts, by the impugned order, the truck with the goods came to be detained/seized under section 129 of the GST Acts on the ground that the transport receipt was a photocopy and the details filled in the transport receipt were handwritten. Further new grounds were raised in affidavit in reply filed on behalf of respondents, namely, that petitioner had not obtained GST registration for commodities which were being transported and that driver of one of the vehicles had given a statement that goods were being transported from Sihor to Aurangabad.
2. Observation-
- Documents required to be kept by the Driver- It was observed by the court thatOn a plain reading of Rule 138A, it is evident that documents which are required to be kept by person in charge of a conveyance while transporting goods are (i) invoice or bill of supply or delivery challan, as the case may be; and (ii) copy of e-way bill. In the present case, admittedly when the trucks in question came to be intercepted, the concerned driver had produced the invoice as well as the e-way bill in respect of the goods which were being transported.
- Documents as required under Rule 138A were provided by the Driver- On a perusal of FORM GST MOV-01, it is abundantly clear that both the documents prescribed under rule 138A of the CGST Rules, viz. the invoice and the e-way bill, were produced by the person in-charge of the conveyance. The proper officer, upon verification of these two documents has not found any discrepancies therein. Hence, in terms of the instructions contained in paragraph 2(b) of circular no. 41/2018 Dated 13th April 2018, proper officer was required to allow the conveyance to move further. However, the proper officer has issued an order of detention under section 129(1) of the CGST Act on the ground that the lorry receipt was a photocopy and did not bear a computerised serial number or contact number details. Thus, the impugned order has been passed contrary to the statutory requirements which do not require production of a lorry receipt by the person in-charge of a conveyance as well as contrary to the instructions issued by the Board in the above referred circular.
- Instructions issued by Board are binding in Nature-Following the rationale laid down in the decision of the Supreme Court in the case of Commissioner of Customs, Calcutta v. Indian Oil Corporation Ltd. [2004] 3 SCC 488, it was observed by the Court that Circulars are binding upon the authorities.
- No EWB-02, EWB-03 prepared by the Officer- In the present case, since no FORM GST MOV-02 has been issued, no Part A of Form GST EWB-03 has been uploaded on the common portal, no FORM GST MOV-04 has been issued and no Part B of Form GST EWB-03 has been uploaded on the common portal, it is clear that the conveyance has been intercepted for verification of documents and not for physical verification inasmuch as, if the officer intended to undertake an inspection he was required to issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02 and thereafter upload Part A of Form GST EWB-03 on the common portal, prepare a report in FORM GST MOV-04 and furnish the same to the petitioner and to upload the final report of the inspection in Part B of Form GST EWB-03 on the common portal.
- Fresh Grounds subsequent to passing of order cannot be raised by the officer- Insofar as the additional grounds raised in the affidavit-in-reply are concerned, it is settled legal position as held by the Supreme Court in Mohinder Singh’s, case (supra) that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise an order bad in the beginning may, by the time it comes to court on account of challenge, get validated by additional grounds later brought out. Thus, it is not permissible for the respondents to try to supplement the grounds set out in the order under section 129(1) of the CGST Act in the affidavit-in-reply filed on their behalf. Nonetheless for the purpose of clarifying the legal position, the said grounds may also be dealt with.
- Goods being taken to different destination than the ones provided in documents- The second ground based on a subsequent so-called statement of driver of one of the conveyances bearing No.GJ-04-AT-9302, which was said to have been recorded on 2.4.2019, wherein the driver has stated that he had loaded the goods at Sihor in Bhavnagar and was to unload them at Aurangabad. FORM GST MOV-01 was issued by proper officer on 2.4.2019, wherein against column 4, it was recorded thus:
“4. I am transporting the goods from Bhavnagar (GJ) to Virar, Thane (MH).”
Therefore, in statutory form, statement of driver was recorded stating that goods were being transported from Bhavnagar to Virar, Thane, however subsequently they sought to place reliance upon some unverified statement produced on record with affidavit-in-reply, which is not permissible in law. Further, destination of goods will have no bearing on tax liability of petitioner, provided destination is outside State of Gujarat and, therefore, no mala fide intention can be imputed to petitioner as petitioner as well as recipient of goods, are registered under the GST Acts and both invoice and e-way bill are found to be in order.
- No Requirement to incorporate details of goods being dealt in the Registration Certificate and thus no detention can be made on such ground- Under sub-rule (4) of rule 8 of the CGST Rules, the person seeking registration is to give details of top five goods with description of the goods and corresponding HSN Code (four digits). Thus, a person is required to specify the top five goods which he wants to supply, but is not prohibited from supplying goods other than those mentioned in the form. Therefore, merely because the petitioner had specified goods like waste, parings and scrap of plastic (HSN Code 3915 taxable at 5%) and the vehicle was carrying TMT Bars and MS Angles, round bars and square bars (HSN Code 7214 taxable at 18%) is no ground to detain such goods, more so, when the goods are correctly described in the invoice and GST payable is computed at 18%.
It would have been a different matter if the above goods were shown in the invoice to be waste, parings and plastic scrap taxable at 5%, but when the goods are correctly described at the appropriate taxable rate, there is no violation of any provision of law merely because such goods are not specified in Part B of FORM GST REG-01, inasmuch as the person who seeks registration is required to specify only the top five goods and not all the goods which he seeks to supply. Indubitably, many suppliers would be dealing with more than five goods; however, in terms of column 18 of the prescribed form, a supplier is required to specify only the top five goods with description of the goods and corresponding HSN Code, therefore, the contention that as the petitioner was not registered qua the goods which were being transported there was breach of any provision of law, does not merit acceptance. Moreover, the learned Assistant Government Pleader is not in a position to pinpoint the provision which has been contravened by the petitioner by transporting goods other than those specified in the registration form.
Besides, the petitioner has immediately thereafter, amended the registration and specified the goods in question. The change in specification of goods is a non-core field and, therefore, does not require the approval of the proper officer while making amendment in the registration form. The respondents in the affidavit-in-reply rely upon the fact that on 8.4.2019, the petitioner, by way of an amendment, added the commodity which was being transported, to submit that disclosure of commodity in registration was mandatory on the ground that had it not been mandatory, the petitioner was not required to carry out the amendment. Such submission on the part of the respondents who are responsible officers of the State Government is quite perturbing, inasmuch as, the officers under the Act are required to make submissions based upon the legal provisions and not on the conduct of the party. Merely because petitioner subsequently amended registration cannot be a ground to submit that reflecting such goods in registration was mandatory, without referring to the statutory provision which mandates such requirement.
3. Held- It was held by the Court that the person in-charge of the conveyance carrying the goods in question had in his possession, the invoice as well as the e-way bill in respect thereof, and both such documents were produced before the proper officer when the conveyance in question came to be intercepted. It is not the case of the respondents that any discrepancy was found in the aforesaid two documents. Under the circumstances, in the light of the instructions contained in Circular dated 13.4.2018 issued by the Board, it was incumbent upon the second respondent to issue a release form in FORM GST MOV-05 and allow the conveyance to move further. However, the conveyance in question has been detained on the ground of discrepancy in transport certificate which is not a requirement prescribed under the statute. Under the circumstances, the second respondent was not justified in passing the order of detention under section 129(1) of the CGST Act. Insofar as the two additional grounds raised in the affidavit-in-reply are concerned, as discussed hereinabove, apart from the fact that it was not permissible for the respondents to supplement the original order by additional reasons in the affidavit-in-reply, even otherwise such reasons have no statutory basis. Under the circumstances, the impugned orders of detention passed by the second respondent under section 129(1) of the CGST Act and other connected statutes as well as the notices issued under section 129(3) of the CGST Act and other connected statutes cannot be sustained.
Siddhbali Stone Gallery v. State of Gujarat [2020] 113 taxmann.com 68 (Gujarat)
Issue: Confiscation Proceedings under Section 130 subsequent to payment of tax and penalty
Facts: Due to inadvertence out of three vehicles, in case of one vehicle e-way bill was not generated. The goods in question viz. marble, were imported from Italy and at the time of import thereof, the integrated goods and services tax payable thereon was already paid.
Contention of Petitioner- It was submitted that having regard to facts of case wherein all documents except the e-way bill were tendered to the authority and even the e-way bill was thereafter immediately generated, there was no reason for respondent authority to issue a notice for confiscation of the goods in question under section 130 of the GGST Act. It was urged that having regard to the fact that the tax and penalty has already been paid, the conveyance together with the goods in question be ordered to be released.
Held: It was held by the court that considering documents placed on record which reveal that petitioner had paid integrated goods and services tax on goods in question at the time of import thereof as well as the fact that after the conveyance came to be intercepted, petitioner has paid tax and penalty on such goods as computed by respondent authorities, by way of ad-interim relief the respondents were directed to forthwith release conveyance being truck number GJ-12- AZ-5184 along with the goods contained therein, subject to the final outcome of the petition.
Tikendra Singh Rithal v. State of Kerala [2019] 111 taxmann.com 319 (Kerala)
Issue: Release of Goods against security furnished by the Petitioner
Facts: Petitioner approached the Court aggrieved by notices of detention under Section 129(1) of CGST Act, in respect of two consignments that were consigned by him to M/s Ceeyen Stone Crusher, Mundathadam, Parappa P.O., Kasaragod. The prayer of the petitioner is for a direction to the respondents to release the consignments against a security to be furnished by the petitioner.
Held: The detention was on account of irregularities in e-way bills that were submitted at the time of transportation. State Tax Officer was directed to release consignment of goods covered by detention notices on the petitioner furnishing a bank guarantee for the tax and penalty amounts in respect of the said consignments. The writ petition is disposed as above.
Valimohammed Jusab & Co. v. State of Gujarat [2019] 110 taxmann.com 488 (Gujarat)
Issue: Detention of Goods sent for Repair on the ground that e-way bill not tendered for goods in movement
Facts: Petitioner submitted that they had a work order in respect of some job-work for which a Winch Machine was transported to Nirma Ltd., Kala Talav. However, on account of some defect in the machinery, the same was taken back to the premises of the petitioner directly to Yadav Trading Co., namely, dealer from whom machinery was purchased for the purpose of repairs on 20.8.2019. Gate pass had been issued by Nirma Ltd. with regard to removal of the Winch Machine from its premises. However, when machine in question was being transported back to the premises of Nirma Ltd., vehicle in question being GJ-04-V-4335 was intercepted and the same has been seized under section 130 of the Gujarat Goods and Service Tax Act, 2017 (hereinafter referred to as ‘GGST Act, 2017’) read with the relevant provisions of other statutes, mainly on ground that e-way bill was not tendered for goods in movement.
Contention of Petitioner- The vehicle came to be intercepted at 18:15 hours on 20.8.2019 and immediately thereafter, at 7.49 p.m., e-way bill came to be generated. attention of the court was invited to the provisions of section 2(108) of the GGST Act, 2017 to submit that taxable supply means a supply of goods or services or both which is leviable to tax under the Act. It was submitted that in present case, goods were merely being transported back to the premises of Nirma Ltd. for job-work and that no goods or services were leviable to tax in respect thereof. Reference was also made to provisions of section 122 of the GGST Act, 2017 and more particularly, clause (xiv) thereof to submit that same provides that where a taxable person who transports any taxable goods without the cover of documents as may be specified in this behalf, he shall be liable to pay a penalty of Rs. 10,000/- or an amount equivalent to the tax evaded or the tax not deducted under section 51 etc. It was submitted that in this case, the petitioner is not liable to pay any tax and hence, at the most, the petitioner could be made liable to pay penalty of Rs. 10,000/-.
Held: It was held by the Court that documents produced on record, prima facie indicate that old and used Winch Machine was being transported from premises of Yadav Trading Co. where it had been sent for repairs and was being transported back to Nirma Ltd. and there is substance in submissions made by learned advocate for the petitioner that at best, the petitioner would be liable to pay fine of Rs. 10,000/- as contemplated under clause (xiv) of section 122 of the GGST Act, 2017. By way ad-interim relief, the respondents were directed to forthwith release Truck No.GJ-04-V-4335 along with goods contained therein subject to the petitioner depositing a sum of Rs. 10,000/- with the respondent authorities.
Sakul Nazar Mohmd v. State of Gujarat [2020] 113 taxmann.com 394 (Gujarat)
Issue: Goods detained on account of Undervaluation of Goods
Contention of Petitioner-Order under section 129(1) of CGST Act is invalid since requirements of section 68 of the CGST Act are duly satisfied inasmuch as, the person in-charge of the conveyance, carrying the consignment of goods, was carrying with him the documents and invoice as described under rule 138(A) of the Central Goods and Services Tax Rules, 2017.
Referring to provisions of section 129 of the CGST Act, it was submitted that the same do not contemplate detention of goods on any ground other than the grounds stated therein and that, undervaluation of an invoice cannot be a ground for detention of goods under section 129 of the CGST Act. The attention of the court was further invited to the report of valuation of stock of the petitioner as prepared by Value Team Professional (Government registered Valuer) prepared for Additional Commissioner of Commercial Tax to point out the basis on which, the market value has been computed by him. It was submitted that based upon such a valuation report, the respondents seek to confiscate the goods of the petitioner.
Held: It was held by the Court that valuation report dated 30.08.2019 does not inspire any confidence and by way ad-interim relief, respondent-authorities were directed to forthwith release truck No. HR-73-7266 along with the goods contained therein.
