2020 (11) TMI 420 - HC - GST

Detention of goods alongwith the vehicle - was the consignment moved without generating the prescribed e-way bills? - HELD THAT - It is observed that there is no serious dispute about the petitioner s assertion that consignment was being transported to the transporter s godown situate within the prescribed distance from the airport premises, and the e-way bills are generated between 3 06 p.m. and 3 12 p.m. The petitioner asserts that the CTO intercepted the vehicle and directed the driver of the vehicle to the CTO Enforcement Office, Devanahalli because Form-Part B of the e-way bills were not populated, and the endorsements in the prescribed form were served at 4 15 p.m. when the vehicles reached the CTO Enforcement Office premises. The provisions of section 129(4) of the KGST Act mandates that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. This stipulation that no tax or interest or penalty shall be determined unless the person concerned is given an opportunity of being heard incorporates the seminal principle of fair play which is inherent in the established principle that no person is to be condemned unheard. If the CTO intended to rely upon data maintained by a third party and shared by such third party pursuant to the communication made by him, the fair play makes it incumbent on the CTO to provide an opportunity to the petitioner to meet the data lest the petitioner is fastened with the liability to pay either the tax or interest or penalty on the basis of the data that, allegedly and as is now alleged by the petitioner, is obtained behind its back to its detriment. Petition allowed in part.

Summary

Issues:
1. Impugning orders under the Karnataka Goods and Service Tax Act, 2017.
2. Detention of a vehicle for transportation of goods without e-way bills.
3. Dispute regarding the generation of e-way bills before the movement of goods.
4. Confirmation of orders by the appellate authority.
5. Allegations of lack of fair play and encashment of Bank Guarantee.
6. Reliance on data from GSTIN and third-party correspondence.
7. Violation of principles of fair play and opportunity of being heard.

Analysis:

1. The petitioner challenged orders dated 20.02.2019 under the Karnataka Goods and Service Tax Act, 2017, regarding the detention of a vehicle transporting goods without e-way bills. The petitioner imports walkie-talkie sets for supply to government departments, and the dispute arose when the Commercial Tax Officer detained a vehicle hired for transportation due to missing e-way bills.

2. The Commercial Tax Officer contended that the consignment could not move without e-way bills as per the KGST Rules, leading to detention under Section 129 of the KGST Act. The CTO detained the vehicle and issued orders under Section 129(3) demanding tax and penalty. The petitioner responded, stating e-way bills were generated before interception, but the CTO disagreed, citing discrepancies in the driver's statement and airport entry records.

3. The appellate authority upheld the CTO's orders, emphasizing the violation of e-way bill rules and confirming the penalty under Section 129(3) of the Act. The authority relied on correspondence with airport security to establish the timeline of events and rejected the petitioner's contentions regarding e-way bill generation and interception timing.

4. The petitioner argued that the consignment was being transported to a godown within the prescribed distance, with e-way bills generated before interception. The petitioner disputed the timeline presented by the CTO and the appellate authority, highlighting discrepancies in the records and lack of opportunity to challenge the evidence against them.

5. The Court noted a fundamental violation of fair play in relying on third-party data without providing the petitioner a chance to contest it. The Court quashed the impugned orders and remitted the case to the CTO for fresh consideration, emphasizing the petitioner's right to challenge all materials relied upon against them.

6. The judgment highlighted the importance of fair play and the opportunity to be heard in tax determinations. It underscored the need for transparency and the right of the concerned party to contest evidence used against them, ultimately leading to the quashing of the orders and a fresh consideration of the case by the Commercial Tax Officer.