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2021 (4) TMI 234 - HC - GSTDetention of goods alongwith vehicle - wrongful availment of input tax credit - It is the argument of the petitioners that such fishing and rowing inquiry in relation to availment of input tax credit and suspicion about the purchase transaction is not within the domain of respondent No.2, while exercising powers under Section 68 of the CGST Act, 2017 while goods are in movement - HELD THAT - This Court is of prima facie view that the provisions of Sections 67, 68 and 129 of the Act of 2017 are required to be interpreted. The circular dated 13.04.2018, issued by the Central Board of Indirect Taxes and Customs though addresses the hardship being faced by the trade/industry on account of incorrect interpretation, if not misuse/abuse of the provisions of Sections 67/68 129 of the Act of 2017 and lays down guidelines for inspection and release of the goods in transit, but the same has not been adhered to by the respondent No.2. As is evident in the present case, if a Check Post Officer or Anti Evasion Officer intercepting the goods and vehicle while in transit, is permitted to carry on such fishing and rowing inquiry, it would impede, rather retard free flow of trade resulting in unnecessary and unwarranted harassment to the carrier of goods, so also to the consignor/consignee - Upon perusal of detention memo (Annex.8), so also Physical Verification Report (Annex.R/4), this Court finds that it is an admitted case of the respondent No.2 that all the documents prescribed under law were available and goods, including its weight, was found in order. Even, genuineness of the goods in transit per se is not in dispute inasmuch as, documents and e-way bill/other documents in relation to transit depicting the goods to be 34.120 tons of MS Scrap in quantity and the nature of goods on physical examination was found to be in accord. Having regard to the fact that goods and vehicle are lying stationed/detained with the respondent No.2 since 11.03.2021; inspection and physical verification of the goods including its weight has already been done. Hence, goods and vehicle are not required, at least for the purpose of inquiry. If they are detained for indefinite period, the condition of stationary truck with weight of 38.120 MT on its tyres, and loss of business of hopeless driver will be irreversible. Besides this, the kind of interim order, which this Court proposes to pass, would not amount to final relief - in the interest of justice it is deemed expedient and hence, respondent No.2 is directed to release the goods and vehicle in question forthwith, in case petitioner No.1 furnishes two solvent sureties to the tune of ₹ 15 lakhs executed by dealers registered in the State of Rajasthan. He shall not insist upon furnishing of bank guarantee or cash security. The case be listed on 19.04.2021.
Issues Involved:
1. Jurisdiction of the respondent to detain goods and vehicle. 2. Legality of the detention and subsequent inquiry. 3. Applicability of Sections 67, 68, and 129 of the CGST Act, 2017. 4. Requirement to furnish bank guarantee or cash security for release of goods. 5. Interpretation of the provisions and circulars under the CGST Act, 2017. Detailed Analysis: 1. Jurisdiction of the Respondent to Detain Goods and Vehicle: The petitioners challenged the jurisdiction of respondent No.2 to detain the goods and vehicle. It was argued that the consignment, which was being transported, had all requisite documents, including Invoice No.194, E-Way Bill No.741179867941, and others. Despite this, respondent No.2 intercepted the goods and did not allow the petitioner to move, directing physical verification and issuing notice in MOV-2. 2. Legality of the Detention and Subsequent Inquiry: The petitioners contended that the inquiry into the alleged wrongful availment of input tax credit was beyond the scope of respondent No.2's powers under Section 68 of the CGST Act, 2017. They argued that such inquiries should be conducted by the regular Assessing Officer, not by the Anti Evasion Officer or check-post incharge. The court noted that the respondent No.2's actions were not justified as all prescribed documents were available and the goods were in order. 3. Applicability of Sections 67, 68, and 129 of the CGST Act, 2017: The court emphasized the need to interpret Sections 67, 68, and 129 of the CGST Act, 2017. It was observed that the circular dated 13.04.2018 issued by the Central Board of Indirect Taxes and Customs, which provides guidelines for inspection and release of goods in transit, was not adhered to by respondent No.2. The court held that once goods in transit conform to the documents, the scope of inquiry under Section 68 ends, and respondent No.2 cannot initiate an inquiry into the genuineness of the purchase and corresponding input tax credit. 4. Requirement to Furnish Bank Guarantee or Cash Security for Release of Goods: The petitioners argued that the provisions of Section 129 of the Act, requiring payment of tax and penalty or furnishing a bank guarantee, would adversely affect their business. The court noted that the statutory remedies would be inefficacious and illusory, given the high proposed penalty. The court directed respondent No.2 to release the goods and vehicle upon furnishing two solvent sureties to the tune of ?15 lakhs executed by dealers registered in Rajasthan, without insisting on a bank guarantee or cash security. 5. Interpretation of the Provisions and Circulars under the CGST Act, 2017: The court highlighted that the provisions of Sections 67, 68, and 129 of the CGST Act, 2017, and the related circulars, are subject to varied interpretations by assessees and authorities. The court observed that the path under the new GST regime is unfamiliar and unmarked, leading to uncertainties in the powers of authorities and responsibilities of dealers. The court found that the notice dated 18.03.2021 issued by respondent No.2 proposed an unjustifiably high penalty, indicating a misinterpretation of the provisions. Conclusion: The court directed the release of the goods and vehicle upon furnishing two solvent sureties, emphasizing that the statutory remedies under Section 129 were inefficacious. The court acknowledged the need for a thorough examination of facts and law for a final decision and noted the uncertainties in the interpretation of the CGST Act provisions. The case was listed for further hearing on 19.04.2021.
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