2020 (11) TMI 324 - HC - GST

Detention of goods alongwith vehicle - wrong destination is noticed - appealable order or not - Section 107 of the S.G.S.T. Act, 2017 - HELD THAT - Noticing the conveyance at a wrong destination without anything more cannot be said to be a contravention of the CGST Act/Telangana GST Act,2017 and it is not an taxable event, for there could be several reasons for the same including the driver losing his way or stopping for repair or to answer a call of nature. Admittedly the vehicle at the time of its detention on 27.01.2020 at Katedhan at 07 50 a.m. by the 1st respondent was accompanied by tax invoice dt.26.1.2020 and e -Way Bill dt.26.01.2020 issued by M/s. Jeevaka Industries Private Limited, Chegunta Village and Mandal, Medak District, Telangana and IGST at the rate of 18% had already been charged thereon - Once the conveyance/vehicle driver had the tax invoice and the e-way bill, there is prima facie compliance with the provisions of the CGST Act and Telanaga GST Act and the rules made thereunder and as per para 5 of the circular dt.14.9.2018 referred to above, it did not warrant initiating of proceedings under Sdc.129 of the Telangana GST Act, 2017. It is not as if when goods are in transit there is a prohibition of their sale by the purchaser to a third party. In fact the court can take judicial notice that it is quite a common thing and a well recognized trade practice. - It is also important to note that 26.1.2020 i.e., the day when the goods were loaded on the vehicle was a Public Holiday, i.e., Republic Day. If there is any transaction between the petitioner and M/s.Laxmi Narasimha Constructions, Proddatur, Andhra Pradesh on 27.01.2020, the next working day after 26.1.2020, there is no need to suspect the bona fides of transaction merely because the Ex.P9 - e - Way Bill was generated at 9.48 am, along with a tax invoice in favour of purchaser, viz., M/s.Laxmi Narasimha Constructions, Proddatur, about two hours after the vehicle s detention at 7.50 am and cannot be construed that petitioner had an intention to unload the goods at Katedan, Hyderabad, which is somehow contrary to law. Any defect, if any, in the documentation accompanying the goods has to be looked at in terms of the Circular dt.14.09.2018 issued by the Central Board of Indirect Taxes and Customs, New Delhi. The action of 1st respondent in collecting the sum of ₹ 4,30,778/- from petitioner on 30.01.2020 is declared as arbitrary and violative of Articles 14 and 265 of the Constitution of India, and also the provisions of CGST Act, 2017 and TGST Act, 2017, and also the Circular CBEC / 20 / 16 / 03 / 2017 GST dt.14.09.2018, issued by the Government of India - Petition allowed.

Summary

Issues Involved:
1. Detention of goods and vehicle by the respondent.
2. Compliance with the provisions of the CGST Act and TGST Act.
3. The validity of the imposition of tax and penalty.
4. The legality of the respondent's actions and the petitioner's right to a refund.

Issue-wise Detailed Analysis:

1. Detention of Goods and Vehicle by the Respondent:
The petitioner, a registered dealer under the Central Goods and Services Tax Act, 2017, placed an order for M.S. Angles from a vendor in Telangana. The goods were loaded on a vehicle and accompanied by a tax invoice and e-Way Bill. During transit, the petitioner received a new order and instructed the driver to deliver the goods directly to the buyer's job site in Telangana to save transportation costs. The respondent detained the vehicle at Katedan, Hyderabad, citing "wrong destination" and issued a detention order under Form GST-MOV06.

2. Compliance with the Provisions of the CGST Act and TGST Act:
The petitioner argued that there was no intention to evade tax and that all required documents, including the tax invoice and e-Way Bill, were in order. The respondent contended that the vehicle's presence at an unmentioned destination raised suspicion. The court noted that the vehicle was accompanied by the necessary documents, and the mere fact of being at a "wrong destination" without further evidence does not constitute a contravention of the Act.

3. The Validity of the Imposition of Tax and Penalty:
The petitioner paid the demanded tax and penalty under protest to release the detained goods and vehicle. The court referenced a Circular by the Central Board of Indirect Taxes and Customs, which states that if a consignment is accompanied by an invoice and e-Way Bill, proceedings under Section 129 of the Act should not be initiated. The court found that the respondent's actions were not justified, as the petitioner had complied with the documentation requirements.

4. The Legality of the Respondent's Actions and the Petitioner's Right to a Refund:
The court held that the respondent did not pass a reasoned order after considering the petitioner's explanation, and thus, the petitioner could not be expected to file an appeal under Section 107 of the TGST Act. The court agreed with the Gujarat High Court's interpretation that the authorities must differentiate between serious violations and minor procedural errors. The court declared the respondent's action of collecting ?4,30,778/- as arbitrary and violative of Articles 14 and 265 of the Constitution of India, as well as the provisions of the CGST Act, 2017 and TGST Act, 2017. Consequently, the court directed the respondents to refund the amount with interest at the rate of 6% per annum from 30.01.2020 till the date of payment within six weeks.

Conclusion:
The court allowed the writ petition, declaring the respondent's actions as arbitrary and unlawful, and ordered the refund of the collected amount with interest. The court emphasized the importance of interpreting taxing statutes to facilitate business and inter-State trading rather than impeding them.