2021 (5) TMI 166 - HC - GST

Detention of goods alongwith vehicle - Intention to evade GST - petitioner alleges that the 1st respondent did not consider the reply of the petitioner and demanded the petitioner to pay tax and penalty for release of the vehicle - HELD THAT - The 1st respondent had acted mechanically without application of mind to the operational convenience of the transporter - Also for the bonafide action of the transporter, the 1st respondent cannot mulct the petitioner with tax and penalty. The petitioner cannot be said to have any intention to evade tax if any mistake is, for the sake of argument without conceding it, has been committed by the transporter - The finding of the officer, the 1st respondent, in the impugned order that the transaction involving the petitioner was 'suspicious' and that the transporter was found 'without proper documents' is perverse and cannot be sustained in these circumstances. The order of detention in Form GST MOV-06 on 29.12.2020 passed under Section 129(3) of the CGST Act, 2017 by the 1st respondent is set aside - Petition allowed.

Summary

Issues:
Writ of Mandamus to declare the action of Deputy Commercial Tax Officer as illegal, arbitrary, and violative of Articles 14 and 300A of the Constitution of India, refund of amounts collected, applicability of Section 129 of the GST Act, detention of goods conveyance, economic duress in payment of GST and penalty.

Analysis:

Detention of Goods Conveyance:
The petitioner, a steel trader, sought relief against the Deputy Commercial Tax Officer's actions in detaining goods conveyance and demanding GST and penalty. The detainment occurred on grounds of defective documents during transportation from Dadra and Nagar Haveli to Hyderabad and Adoni. The petitioner argued that the transporter loaded goods for operational convenience, intending to deliver the Hyderabad consignment first and then proceed to Adoni. The Court found the detainment arbitrary, emphasizing the transporter's operational convenience and the absence of tax evasion intent.

Applicability of Section 129 of the GST Act:
The petitioner contended that Section 129 applies only in cases of proven tax evasion intent during transportation. The Court agreed, stating that the absence of such intent renders Section 129 inapplicable. The petitioner's compliance with valid tax invoices and e-waybills further supported the argument against tax evasion allegations.

Economic Duress in Payment of GST and Penalty:
The Court noted that the petitioner paid GST and penalty under economic duress to secure the vehicle's release. This payment, made on 04.01.2021, was deemed coercive, and the petitioner was entitled to a refund. The Court criticized the officer's findings of suspicion and lack of proper documents as unfounded and unsustainable.

Conclusion:
The Writ Petition was allowed, setting aside the detention order and declaring the officer's actions as arbitrary and violative of constitutional provisions. The respondents were directed to refund the amounts paid by the petitioner with interest. The Court emphasized the importance of considering operational convenience and rejected the officer's mechanical approach. The judgment highlighted the need to prevent undue financial burden on individuals due to coercive actions by authorities.