2020 (11) TMI 110 - HC - GST

Detention of goods alongwith vehicle - non-registration of the person making the interstate supply - purchase bill issued by the petitioner - valid document for the purposes of supporting an interstate taxable supply or not - petitioner contends that, while the consignor agriculturist is not required to take any registration in view of the express provisions of Section 23(1)(b) of the Act, he is also not required to take a compulsory registration under Section 24, since the non-obstante clause in Section 24 does not apply to agriculturists mentioned under Section 23 - HELD THAT - In the instant case, the declaration by the petitioner in the e-way bill, as also before the respondent authorities, has consistently been that the purchase was effected from an agriculturist in Karnataka who, going by the provisions of Section 23 of the GST Act, is not required to get himself registered for the sale of agricultural produce. Even assuming that the respondents dispute the said contention of the petitioner, the remedy available to them is to proceed against the agriculturist in question, for not taking the registration as required under the applicable provisions of the Act. The non-registration of the consignor, or the alleged mis-classification of the goods under transportation, cannot be a ground for detention under Section 129 of the GST Act. In the instant case, if this Court ignores the classification issue as also the non-registration issue which are not relevant for the purposes of Section 129 of the Act, then it is the provisions of Section 129(1)(b) that would apply for the purposes of determining the deposit that the petitioner would have to make for obtaining a clearance of the goods and the vehicle - the petitioner would have to pay the lesser of an amount equal to 5% of the value of the goods or ₹ 25,000/-. In the instant case, the value of the goods being approximately ₹ 10 lakhs, the lesser amount would be ₹ 25,000/- which amount the petitioner would necessarily have to pay to obtain a release of the goods and the vehicle. The writ petition is disposed off by directing the respondents to release the goods and the vehicle to the petitioner on the petitioner paying an amount of ₹ 25,000/-, as required in terms of Section 129(1)(b) read with Section 129(3) of the GST Act.

Summary

Issues: Detention of consignment in transit, non-registration of consignor, mis-classification of goods, detention under Section 129 of GST Act, liability of petitioner for release of goods.

Detention of consignment in transit:
The petitioner, a purchaser of fresh turmeric, challenged the detention of the consignment in transit at Muthanga in Wayanad. The consignment was transported under an invoice and e-way bill generated by the petitioner, showing the goods as attracting tax on a reverse charge basis and being exempted from tax under HSN code 910. The detention was due to non-registration of the person making the interstate supply and the validity of the purchase bill as a supporting document for interstate taxable supply.

Non-registration of consignor and mis-classification of goods:
The petitioner argued that the consignor agriculturist did not require registration under Sections 23 and 24 of the GST Act. Even if the goods were wrongly classified, detention under Section 129 was not justified. The absence of a delivery challan from the consignor did not warrant detention based solely on the petitioner's generated invoice. The government pleader stated that the goods did not match the description of exempted goods under HSN Code 910 and lacked a necessary delivery challan.

Detention under Section 129 of GST Act:
The court held that the non-registration of the consignor or mis-classification of goods could not be grounds for detention under Section 129. Despite the absence of a delivery challan, a valid e-way bill covered the transportation, describing the goods under HSN Code 910. The liability of the petitioner for the release of detained goods was determined under Section 129(1)(b), requiring payment of 5% of the goods' value or ?25,000, whichever is lesser.

Liability of petitioner for release of goods:
The court directed the release of goods and the vehicle upon the petitioner paying ?25,000, as per Section 129(1)(b) and Section 129(3) of the GST Act. The respondents were instructed to release the goods upon payment and complete proceedings under Section 129(3). The government pleader was tasked with communicating the judgment to the concerned respondent for immediate compliance upon payment by the petitioner.