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2020 (11) TMI 917 - HC - GSTDetention of goods alongwith vehicle - Allegation of attempt to sale goods in between - detention on the ground that prima facie the 'documents tendered were found to be defective' - mismatch between the goods in movement and the documents tendered - remedy of appeal under Section 107 of the TGST Act - HELD THAT - Without there being any order/decision passed by the 1st respondent and communicated to the petitioner, the petitioner cannot be expected to file appeal invoking Section 107 of the TGST Act, 2017 - the plea of the 1st respondent that the petitioner should avail the remedy of appeal under Sec. 107 of the TGST Act is rejected. Any defect, if any, in the documentation accompanying the goods for purpose of levy of tax and penalty has to be looked at also in terms of the Circular dt. 13.4.2018 and Circular dt. 14.09.2018 issued by the Central Board of Indirect Taxes and Customs, New Delhi - In the instant case, one of the grounds for detention in Form GST MOV-06 is that 'the documents which were tendered are found to be defective'. From the very contents of the Form GST MOV-06, wherein it is alleged that the 'documents tendered are found to be defective', it is clear that the documents available with the driver were actually tendered to the 1st respondent. They clearly showed that the goods were to be delivered at Secunderabad. Therefore as mentioned in the Circular dt. 13.4.2018, the vehicle should be allowed to proceed further and the movement of goods cannot be stopped prima-facie - The explanation offered by the petitioner in reply dt. 23-01-2020 to the notice in Form GST MOV-06 dt. 22-01-2020 that generally material from Salem, Tamil Nadu purchased by various dealers at Hyderabad which is to be delivered at Hyderabad at various destinations do come in groups and assemble at IDA Jeedimetla; that the vehicles through Outer Ring Road reach Jeedimetla as there is no entry for heavy vehicle into the city through main roads; and the person in charge from SAIL (TN) reaches IDA Jeedimetla and directs the vehicle drivers to the respective delivery points, cannot be said to be unbelievable. The fact that the said explanations have not even considered by the 1st respondent is also glaring. Whether 'checking of the vehicle at IDA Jeetimetla, Hyderabad' is ground for detention of goods under Section 129 of the Act or Rules made under the Act or as per the Circulars issued by Central Board of Indirect Taxes and Customs, GST Policy Wing? - HELD THAT - It is not the case of the 1st respondent that mere checking of a vehicle or it being found at a different place without anything more, is by itself a 'taxable event' under the CGST Act/Telangana GST Act, 2017 - under these Acts, it is not permissible to detain a vehicle carrying goods or levy penalty on the sole ground that the vehicle is found at a wrong destination without anything more. Admittedly, the vehicle was found at weigh bridge, IDA Jeedimetla and it is not the case of the 1st respondent that at the time of it's detention or check at that location, there was sale of goods being done without paying applicable tax. In fact there is no material placed on record by 1st respondent to show that any attempt was being made by petitioner to sell the goods in local market at IDA Jeedimetla on 22.1.2020 evading CGST and SGST - the reasons given for detaining the goods and the vehicle they were being carried in do not indicate any violation of the provisions of the Act by petitioner warranting levy of tax and penalty on the petitioner under the Act. The detention of the vehicle at IDA Jeedimetla in spite of the vehicle carrying tax invoice and the e-way bill is in violation of the provisions of the Act, in particular Rule 68 of the Rules framed under the Act and the Circulars dt. 13.4.2018 and 14.9.2018 of the Central Board of Indirect Taxes and Customs which are binding on the 1st respondent and that the 1st respondent was not justified in collecting tax and penalty from the petitioner - the 1st respondent cannot rely on the fact that after release of goods on 25-01-2020 at 6.15 p.m., the petitioner generated another e-way bill dt. 26-01-2020 on the same vehicle for the same value of the goods and marked it to be delivered to M/s. Nanabhai Steels in IDA Jeedimetla, Telangana. The action of the 1st respondent in detaining the vehicle carrying the goods purchased by petitioner on 22-01-2020 and forcing the petitioner to pay on 25-1-2020 a sum of ₹ 9,40,618/-towards tax and penalty is declared as illegal, arbitrary and violative of Article 14 and 265 of the Constitution of India apart from Article 301 of the Constitution of India and also the provisions of the Act and Rules made thereunder - Petition allowed.
Issues Involved:
1. Legality of detention of the vehicle and goods. 2. Validity of the demand for tax and penalty. 3. Compliance with procedural requirements under the GST Act and Rules. 4. Violation of constitutional provisions. 5. Entitlement to refund of tax and penalty paid under protest. Issue-wise Detailed Analysis: 1. Legality of Detention of the Vehicle and Goods: The petitioner, a trader in steels, contended that the detention of their vehicle and goods by the 1st respondent at IDA Jeedimetla on 22-01-2020 was illegal and arbitrary. The vehicle was carrying all required documents, including a tax invoice and an e-way bill, valid from 21-01-2020 to 27-01-2020. The 1st respondent detained the vehicle on the grounds of a "mismatch between the goods in movement and the documents tendered" and the vehicle being checked at a different location than mentioned in the documents. The court found that the documents tendered by the driver were valid and showed that the goods were to be delivered at Secunderabad. The explanation provided by the petitioner that the vehicles from SAIL assemble at IDA Jeedimetla before being directed to their final destinations was plausible. The court held that mere checking of the vehicle at a different location without any evidence of sale or tax evasion did not justify detention under Section 129 of the GST Act. 2. Validity of the Demand for Tax and Penalty: The petitioner argued that the demand for tax and penalty was made despite all required documents being in order and without any formal order assigning reasons for the detention. The court noted that Section 129 of the GST Act applies only when there is an intention or possibility of tax evasion. The 1st respondent did not establish any such intention on the part of the petitioner. The court held that the demand for tax and penalty was illegal and arbitrary. 3. Compliance with Procedural Requirements under the GST Act and Rules: The court examined the procedural requirements under Sections 68 and 129 of the GST Act and the relevant rules and circulars issued by the Central Board of Indirect Taxes and Customs. It was found that the 1st respondent did not comply with these procedures, particularly the requirement to pass a reasoned order and communicate it to the petitioner. The court emphasized that interpretation of taxing statutes should facilitate business and not impede it through harassment. 4. Violation of Constitutional Provisions: The petitioner contended that the actions of the 1st respondent violated Articles 14 and 301 of the Constitution of India. The court agreed, stating that the detention and demand for tax and penalty were arbitrary and without legal basis, thus violating the petitioner's right to equality and freedom of trade. 5. Entitlement to Refund of Tax and Penalty Paid Under Protest: The court held that the petitioner was entitled to a refund of the tax and penalty paid under protest. The payment was made under coercion to avoid disruption in their delivery schedule. The court directed the 1st respondent to refund the amount of ?9,40,618/- along with interest at 7% per annum from 25-01-2020 till the date of payment. Conclusion: The writ petition was allowed, declaring the detention and demand for tax and penalty as illegal and arbitrary. The court directed the 1st respondent to refund the collected amount within six weeks, with interest. The judgment emphasized the need for compliance with procedural requirements and the importance of facilitating business through fair interpretation of taxing statutes.
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