2021 (7) TMI 926 - HC - GST

Seizure of heavy vehicle - Ashok Leyland trucks - e-way bills for these heavy vehicles not present - it was asserted that the goods were being brought within the State by contravening the provisions of Tripura State General Sales Tax Act, 2017 - intent to evade tax - HELD THAT - Superintendent of Taxes has adopted a procedure which is wholly irregular. In the show cause notice dated 15th May 2021, he had not elaborated the ground that the e-way bills did not carry the reference to the temporary registration numbers duly certified by the State RTO authorities, a ground which he raised in subsequent communication dated 20th May 2021. The petitioner, therefore, did not have opportunity to meet with these grounds. Further, he has raised a demand for unpaid tax with penalty and sought to recover the same from the consignee - This is wholly irregular. Demand notice must be preceded by an order of assessment, an order which can also be challenged by the person aggrieved before the appellate authority. In the present case the initial show cause notice which the Superintendent of Taxes issued to the petitioner did not contain the grounds which were mentioned in the later communication dated 21st May 2021. The reply that the petitioner therefore filed to the show cause notice, on 19th May 2021, did not cover the grounds and allegations made in the communication dated 20th May 2021 - Though the Superintendent of Taxes is permitted to carry out proper assessment and pass an order of assessment, the petitioner must be given an additional opportunity to file reply. Demand notice dated 29th May 2021 is set aside - For the purpose of carrying out assessment, the show cause notice, dated 15th May 2021 read with the communication dated 20th May 2021, from the Superintendent of Taxes to the petitioner shall be treated as a show cause notice - petition disposed off.

Summary

Issues:
1. Validity of detention of vehicles by GST authorities for not possessing valid e-way bills.
2. Justifiability of tax demand raised by Superintendent of State Taxes.
3. Irregularity in the procedure followed by the Superintendent of Taxes.
4. Legality of raising demand on consignee without passing an order of assessment.
5. Detention of vehicles and conditions for their release.

Analysis:

1. The petitioner, a transporter, had four trucks intercepted by GST authorities for not possessing valid e-way bills. The Superintendent of State Taxes alleged tax evasion and issued a show cause notice on 15th May 2021. The petitioner responded, stating that all necessary documents were carried, including valid e-way bills, tax invoices, and gate passes. The Superintendent later claimed a breach of Rule 138 of State General Sales Tax Rules, 2017, and invoked Section 129 of the GST Act due to missing temporary registration numbers on e-way bills.

2. The petitioner argued that the subsequent generation of corrected e-way bills rectified the technical defect, and the tax was fully paid. The Superintendent's demand on the consignee without an assessment order was deemed irregular. The State justified the interception, stating that subsequent compliance did not nullify the initial violation. The consignee contended that they were not responsible for transportation issues or tax liabilities.

3. The Court found irregularities in the Superintendent's procedure, noting discrepancies between the initial show cause notice and subsequent communications. The Superintendent failed to provide grounds for detention in the initial notice, depriving the petitioner of a fair opportunity to respond. The Court emphasized the necessity of an assessment order preceding any tax recovery actions.

4. While the demand notice dated 29th May 2021 was set aside, the Court directed the Superintendent to conduct a proper assessment, allowing the petitioner to submit a further reply by 20th August 2021. The Superintendent was instructed to consider the response, provide a hearing if requested, and issue an assessment order in compliance with GST Act provisions.

5. The Court ordered the release of detained vehicles upon the petitioner furnishing an unconditional bank guarantee for 25% of the total amount and a bond for the remaining 75% indicated in the demand notices. The release was deemed necessary due to the vehicles' prolonged detention since 13th May 2021 and the potential damage caused by the ongoing monsoon season.