2019 (5) TMI 932 - HC - GST

Detention of consignments with vehicle - transport of consignments of Off Highway trucks that are zero rated in terms of Section 18 of the IGST - goods unaccompanied by valid E-way bills - Section 129 (1) of the Central Goods and Services Tax Act, 2017 - imposition of penalty. HELD THAT - It is the Assessing Officer / State Tax Officer who is the competent and proper person for such determination/quantification. However, a holistic reading of the statutory provisions, indicates that the Department does not paint all violations/transgressions with the same brush and makes a distinction between serious and substantive violations and those that are minor/procedural in nature. Though the petitioners have been issued notices in terms of Section 129 (4) of the Act calling upon them to appear for adjudication, they have not responded to the same. The petitioners are thus directed to appear before the first respondent on 06.03.2019 at the first instance, for commencement of proceedings for adjudication. The question of whether the movement of the consignments sans valid E-way bills constitutes a substantive error or a mere technical breach shall be considered by the Assessing Officer, having regard to the provisions of Sections 122, 125 and 126 of the Act as well all relevant Instructions and Circulars issued by the Board. Let the officer also bear in mind that E-way bills, though stale, had, in fact, accompanied the consignments. The assessees/petitioners have offered explanations in regard to the circumstances that caused the documents to expire and such explanations will be taken into consideration by the officer in determining the quantum of penalty to be levied. Consignments in the case of Caterpillar - HELD THAT - Their immediate release is ordered, the interests of the Department must remain protected. The penalty is quantified, for the moment, and solely for the purposes of this order, 100% of the tax. The goods shall be released forthwith, upon condition that Caterpillar furnish a Bank Guarantee(s) for a sum of ₹ 3,84,30,193/- in favour of the detaining Authority prior to such release. Proceedings for adjudication shall be completed within a period of six weeks from the date of initial hearing, being 06.03.2019. It is agreed by the Transporter as well as the Revenue that, as far as the Transporter is concerned, a sum of ₹ 7,16,168/- has been remitted covering the tax as well as penalty and the goods have already been released - as far as the case of Transporter is concerned, proceedings for adjudication shall go on and shall be completed within a period of four weeks from the date of initial hearing, being 06.03.2019 - Upon conclusion thereof, the amount paid by the petitioner shall be adjusted against the demand of tax and penalty determined in assessment. Petition disposed off.

Issues Involved:
1. Validity of E-way bills and their expiration.
2. Detention of goods for lack of valid E-way bills.
3. Imposition of tax and penalty under Section 129 of the CGST Act.
4. Adjudication process and the role of the Assessing Officer.
5. Quantum of penalty and protection of the Department's interests.
6. Release of goods upon furnishing security.

Detailed Analysis:

1. Validity of E-way Bills and Their Expiration:
The petitioner, Caterpillar India Private Limited, transported consignments without valid E-way bills. The E-way bills had expired due to delays in obtaining special police permission required for the movement of the consignments. Similarly, the Transporter faced a breakdown of the lorry, rendering the E-way bill invalid. Both parties moved the consignments despite knowing the documents were stale.

2. Detention of Goods for Lack of Valid E-way Bills:
The respondents detained the consignments under the proviso to Section 129(1) of the Central Goods and Services Tax Act, 2017, as the goods were transported without valid E-way bills. Notices specifying the tax and penalty payable were issued to both Caterpillar and the Transporter.

3. Imposition of Tax and Penalty Under Section 129 of the CGST Act:
Section 129(3) requires the Proper Officer to issue a notice specifying the tax and penalty payable and to afford an opportunity for a personal hearing. Notices were issued, but neither party appeared before the respondents, opting to approach the Court directly. The Court noted that the petitioners did not take necessary measures to extend the validity of the E-way bills or generate new ones.

4. Adjudication Process and the Role of the Assessing Officer:
The Court directed the petitioners to appear before the first respondent for adjudication. The Assessing Officer will determine whether the movement of consignments without valid E-way bills constitutes a substantive error or a technical breach, considering Sections 122, 125, and 126 of the Act and relevant Circulars.

5. Quantum of Penalty and Protection of the Department's Interests:
The Court emphasized that the penalty's quantum should be determined by the Assessing Officer. For Caterpillar, the penalty was quantified at 100% of the tax for the purpose of the order. The Court highlighted that the Department's interests must be protected while considering the explanations offered by the petitioners for the expired documents.

6. Release of Goods Upon Furnishing Security:
The Court ordered the immediate release of Caterpillar's consignments upon furnishing a Bank Guarantee of ?3,84,30,193 in favor of the detaining Authority. The adjudication proceedings for Caterpillar were to be completed within six weeks from the initial hearing date. For the Transporter, the goods had already been released upon remittance of ?7,16,168 covering tax and penalty. The adjudication proceedings for the Transporter were to be completed within four weeks from the initial hearing date, with the amount paid to be adjusted against the demand of tax and penalty determined in the assessment.

Conclusion:
The Court disposed of the writ petitions with directions for the adjudication process to proceed and the goods to be released upon furnishing the required security. There was no order as to costs, and connected WMPs were closed.

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