2020 (9) TMI 1141 - HC - GST

Detention of vehicle - E-way bill did not mention correct details - the G.S.T. Tribunal has not been constituted so far by the Central Government for the State of Uttar Pradesh - Section 129 of the Central Goods and Services Tax Act, 2017 - HELD THAT - Admittedly, in the facts of the present case the petitioner did accept that the e-way bill with the vehicle did not contain correct description with regard to movement of goods. Another e-way bill (though not available with the vehicle, at the time of detention) has also been produced along with details of job work executed in favour of the petitioner. The tax invoice which has been relied upon for determining the liability of tax admittedly is of the year 2018 and it is not the case of the Department that such amount of tax was not paid at the time when the machine was purchased in the year 2018 itself. It is also not the case of the Department that this machine has been sold to anybody. Perusal of the orders passed would clearly go to show that the claim set up by the assessee with regard to transportation of machine for performance of job work has not been examined on merits. There is also no consideration or finding in the orders passed by the authority which may suggest that this transportation of machine was for any other purpose. The proper Officer in terms of the scheme was expected to examine the specific defence set up by the petitioner and consequently determine the liability of tax payable by the petitioner. It is only after determining the liability to pay tax that the liability to pay penalty could be determined. This exercise does not appear to have been performed by the proper Officer in the manner expected by it in accordance with the Act. Petitioner's claim that no liability to pay tax had arisen till the time when the machine was being transported is also required to be examined. Such factual issues require proper determination at the level of the proper Officer, at the first instance. The proper Officer is requested to examine such defence of the petitioner and thereafter determine the liability, if any, in accordance with law. It is made clear that this Court has not determined the liability of the petitioner on merits and all issues of fact are left open to be examined by the proper Officer, at the first instance - petition allowed by way of remand.

Summary

Issues:
1. Jurisdiction of the C.G.S.T. Tribunal under Section 112(3) and 113(1) of the Central Goods and Services Tax Act, 2017.
2. Detention and seizure of goods under Section 129 of the Act.
3. Assessment of tax and penalty on detained goods.
4. Examination of the defense set up by the assessee regarding the nature of the transaction and liability to pay tax.

Jurisdiction of the C.G.S.T. Tribunal:
The petition was filed under Article 226 of the Constitution against the order passed by the Proper Authority and first appellate authority due to the absence of a G.S.T. Tribunal in Uttar Pradesh. The petitioner argued that the statutory right to approach the Tribunal cannot be denied once the Act is enforced. Reference was made to Section 112(3) and 113(1) of the Act, emphasizing that appeals before the Tribunal are not limited to legal questions but also include factual issues. The Court was urged to protect the petitioner's rights concerning the statutory remedy available before the Tribunal.

Detention and Seizure of Goods:
A transport vehicle was detained for violating Rule 138 of the G.S.T. Rules. The petitioner claimed that the E-way bill was mistakenly generated and provided a correct bill indicating the machine was for job work. The assessing authority found tax unpaid and imposed penalties, affirmed in appeal. The petitioner contended that the authorities failed to consider the job work execution and the consequent tax liability properly.

Assessment of Tax and Penalty:
The Act allows detention and seizure of goods in transit for contraventions, with release upon payment of applicable tax and penalty. The proper officer must issue a notice specifying the payable tax and penalty and then pass an order for payment. The petitioner argued that no tax liability had arisen as the job work was pending and no payment received, which the authorities allegedly did not consider. The Court noted discrepancies in the description of goods in the E-way bill and the claim of job work execution.

Examination of Defense by Assessee:
The petitioner's claim that the machine was for job work and not for sale was not properly examined by the authorities. The tax invoice was from 2018, and the petitioner's defense was not adequately addressed. The Court found that the proper officer did not assess the tax liability properly, quashing the impugned orders and directing the petitioner to appear before the officer for further examination. All factual issues were left open for proper determination by the officer within a specified timeframe.