2022 (8) TMI 811 - HC - GST

Levy of penalty u/s 129 (3) of the Central Goods and Service Tax Act, 2017 - Detention of vehicle of petitioner - detention for the reason of suspected transaction - whether transaction appeared to be 'doubtful'? - HELD THAT - The point of origination of goods is Telangana and not Guwahati as claimed. Though this point was specifically put to the petitioner in the course of adjudication proceedings and the petitioner could very well have produced the toll receipts or any other information/material in its possession to disprove the suspicion, this does not appear to have been done. It is on the basis of the aforesaid discussion that the impugned order has to be passed. No violation amenable to Article 226 of the Constitution of India has been made out by the petitioner. No doubt, the petitioner may still have in its possession/material to disprove the conclusions of the respondent authorities. However, consideration of such information, if at all, would involve an examination of disputed facts which this Court is not inclined to embark upon in a writ petition. The petitioner has an efficacious, alternate remedy provided under Section 107 of the aforesaid Act and is at liberty to approach the Respondent/Appellate Authority as expeditiously it desires. It is also a settled position that an Appellate Authority has all powers incidental and ancillary to the power of disposal of an appeal that include powers of grant of interim protection and release of seized material - Petition dismissed.

Issues:
1. Detention of goods based on suspicion without tangible evidence.
2. Rejection of request for cross-examination by the authority.
3. Dispute regarding the place of origin of goods.
4. Applicability of Circular No. 10/2019 for penalty imposition by Roving Squad.

Detailed Analysis:
1. The petitioner, engaged in the supply and manufacture of enamelled copper using copper scrap as raw material, faced detention of 25,110 Kilograms of copper scrap by the Roving Squad on 13.05.2022 at Dharmapuri. The detention was due to a suspected transaction, leading to an order requiring further adjudication. The petitioner argued against detention based on mere suspicion, requesting tangible evidence of law violation. However, the authority rejected the request, citing the vendor's communication transferring ownership to the petitioner, who was responsible for compliance. The suspicion regarding the origin of goods from Telangana instead of Guwahati was raised based on toll booth records, but the petitioner failed to provide evidence to counter this suspicion, resulting in the impugned order.

2. The petitioner's submission before the authority and the court highlighted the lack of concrete evidence supporting the detention and the need for cross-examination of relevant persons. Despite the petitioner's insistence, the authority rejected the request for cross-examination, relying on the vendor's communication transferring ownership. This refusal to allow cross-examination further complicated the dispute and added to the petitioner's challenges in proving the legitimacy of the transaction.

3. The issue of the place of origin of goods emerged as a crucial point of contention in the adjudication proceedings. The suspicion raised by the authorities regarding the goods originating from Telangana instead of Guwahati was not effectively addressed by the petitioner. The failure to produce toll receipts or other evidence to refute this suspicion weakened the petitioner's position, ultimately leading to the dismissal of the writ petition by the court. The complexity of determining the actual place of origin of goods added layers to the legal dispute and underscored the importance of providing substantial evidence in such cases.

4. The petitioner referenced Circular No. 10/2019, dated 31.05.2019, which outlines circumstances where penalties may not be imposed by the Roving Squad, offering exceptions related to tax rate, goods classification, place of supply, and goods valuation disputes. However, in this case, the issue of the place of origin of goods did not fall within the exceptions mentioned in the circular. Despite this reference, the court dismissed the writ petition, emphasizing the petitioner's right to pursue an alternate remedy under Section 107 of the Central Goods and Service Tax Act, 2017, and seek interim protection through the Appellate Authority within a specified timeline.

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