2023 (1) TMI 1224 - HC - GST

Detention of goods - Movement of goods through valid e-way bill - Levy of penalty under Section 129(1)(b) of the IGST Act, 2017 - bogus firms - it is alleged that selling dealer was non existent at the place where his firm is said to have been registered and only through the e-way bill generated, goods were being sent from some other undisclosed place and ITC was to be claimed - HELD THAT - Both the authorities have recorded a categorical finding to the effect that selling dealer, M/s. Sunshine Overseas was registered at Shri Ram Colony, Siya Wali Masjid, Rajeev Nagar, North East Delhi, Delhi. The e-way bill mentioned the goods to have been dispatched from the said place. The statement of the driver recorded disclosed that goods were loaded from Mayapuri, Delhi, which is 18 kms. away from Rajeev Nagar. On physical verification of the premises of M/s. Sunshine Overseas, it is clear that no business transaction was being done from that place and the GST registration was suspended on 04.05.2022. The selling dealer till date has not responded to the notice of the taxing authorities nor has come forward to state that goods were sent by him through the e-way bill alleged to have been generated from the portal from the address mentioned therein. The taxing authorities had also scrutinized the records of the selling dealer for the assessment year 2021-22 and found that it was not indulging in any sale and purchase and bogus transactions were only made for claiming ITC. Once, it is found that selling dealer was bogus firm, the goods carrying the e-way bill generated by such firm is of no benefit to the petitioners as the same has been used for transiting the goods from non bona fide dealer from undisclosed place. Thus, no interference is required in the orders passed by respondent nos. 3 and 4 - petition dismissed.

Summary

Issues:
Challenge to show-cause notice and penalty under Section 129(1)(b) of the IGST Act, 2017 based on intercepted goods with e-way bill discrepancy.

Analysis:
The writ petition challenged a show-cause notice dated 29.04.2022 and subsequent penalty under Section 129(1)(b) of the IGST Act, 2017 issued by respondent no. 4, along with an appellate order dated 30.06.2022 by respondent no. 3. The case involved petitioner no. 2, a private limited company engaged in smelting and lead manufacture, which placed an order for scrap batteries intercepted during transit. The seller, M/s. Sunshine Overseas, was found to be a bogus firm with a suspended registration. The authorities alleged a discrepancy in the loading location of goods compared to the e-way bill details, leading to the penalty imposition. The petitioner contended that the goods had all necessary documents, and the appellate authority should not question the seller's bona fides at the time of registration. However, the State argued that the transaction was part of a bogus scheme for ITC benefits.

The Court deliberated on whether to interfere with the challenged orders, considering the findings that the selling dealer was non-existent at the registered address, and goods were dispatched from an undisclosed location for ITC claims. The e-way bill indicated dispatch from a specific place, but the driver's statement revealed a different loading location. Physical verification of the selling dealer's premises confirmed non-existence and registration suspension. The selling dealer failed to respond to authorities' notices or clarify the discrepancy. Taxing authorities also found no genuine business transactions, indicating a scheme for ITC claims. Respondent no. 4 recorded no banking transactions between the parties, reinforcing the bogus nature of the selling dealer.

Ultimately, the Court upheld the orders of respondent nos. 3 and 4, determining that no interference was warranted based on the established facts and circumstances. Consequently, the writ petition was dismissed, affirming the penalty imposition and appellate dismissal.