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2020 (9) TMI 1057 - HC - GSTTerritorial Jurisdiction - Detention of goods during stock transfer - recovery of GST and penalty - It is contended that the deviation pointed by the 3rd respondent in the detention order is unsustainable because the GST registration of the petitioner in the State of Telangana itself shows its principal place of business at Hayathnagar and additional place at Bongulur village, Ibrahimpatnam Mandal and therefore the 3rd respondent acted illegally in recovering tax and penalty from the petitioner by detaining the goods - HELD THAT - Once it is clear that petitioner has additional place of business in the State of Telangana in Bongulur village, Ibrahimpatnam Mandal and the goods were being transported to that address from its Corporate office at Ranipet, Tamil Nadu State, it cannot be said that the petitioner was indulging in any illegal activity when the tax invoice shows that the supplier is the petitioner s Corporate office in Ranipet, Tamil Nadu State and that it was shipped to its Depot in Bongulur village in Ibrahimpatnam Mandal. There was no occasion for the 3rd respondent to collect tax and penalty from the petitioner on the pretext that there is illegality in the transport of goods as it would merely amount to stock transfer and there is no element of sale of goods or services in it. Respondents are directed to refund within four (04) weeks the sum of ₹ 6,70,448/- collected towards CGST and State GST and penalty from the petitioner with interest @ 9% p.a. from 05-03-2020 till date of payment to petitioner by the respondents. The 3rd respondent shall also pay costs of ₹ 1,500/- to the petitioner - Petition allowed.
Issues involved:
Detention of goods under GST Act for mismatch between documents and goods transported, legality of tax and penalty imposed, abuse of process of court, legality of stock transfer under GST regime. Analysis: 1. Detention of Goods: The petitioner, engaged in the business of tractors and spares, faced detention of goods due to alleged discrepancies between the e-way bill and actual movement of goods. The detention was based on a mismatch in the transportation details, leading to the issuance of a show cause notice under Section 129(3) of the CGST Act,2017 and TSGST Act,2017. The detention resulted in a significant tax and penalty demand, prompting the petitioner to pay under economic duress to secure the release of the goods. 2. Legality of Tax and Penalty: The petitioner challenged the detention and subsequent tax and penalty imposed by the 3rd respondent, contending that the stock transfer from Tamil Nadu to Telangana did not involve a taxable event as there was no sale of goods or services. The petitioner argued that the actions of the 3rd respondent were unsustainable and illegal, emphasizing that the registration certificate clearly indicated the principal and additional places of business. 3. Abuse of Process of Court: The 3rd respondent defended the actions by stating ignorance regarding the petitioner's multiple depots and highlighted the lack of information in the invoice or e-way bill. However, the Court dismissed this defense, noting that the petitioner's registration details were easily verifiable on the GST portal. The Court also rejected the notion that the petitioner remained silent out of choice while facing a substantial tax and penalty demand. 4. Legality of Stock Transfer under GST Regime: The judgment clarified that the petitioner's transfer of goods to its Telangana depot constituted a stock transfer, not a sale, and therefore did not attract tax liability. The Court emphasized that the petitioner's compliance with the GST requirements and the nature of the transaction as a stock transfer supported the petitioner's position. 5. Final Decision: In the final ruling, the Court allowed the Writ Petition, directing the respondents to refund the tax, penalty, and interest collected from the petitioner. The Court emphasized that the detention and subsequent collection of tax and penalty were unjustified, given the nature of the transaction as a stock transfer. The judgment highlighted the importance of verifying registration details and conducting due diligence before imposing tax liabilities. This comprehensive analysis of the judgment highlights the key issues addressed by the Court, the arguments presented by the parties involved, and the final decision rendered by the High Court.
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