2023 (3) TMI 1357 - HC - GST

Detention of goods alongwith vehicle - detention mainly on the ground that the goods were without E-Way bill - petitioner argues that the order imposing the penalty that too on valuation without jurisdiction is wholly bad in law. HELD THAT - Section 7 of the Act provides for levy and collection of tax and Chapter IV provides for determination of value of supply. Section 15 of the Act provides for value of taxable supply, Section 15(4) makes it clear that if the value of the supply of goods or services or both cannot be determined under Section (1), the same shall be determined in such manner as may be prescribed - the value of the goods in transit is to be determined in accordance with the provisions of Section 15 declared in an invoice or a bill of supply or a delivery challan in respect of the consignment. Even Section 15 Sub-Section 1 of the Act prescribes that the value of the supply of goods or services shall be the transaction value which should include the amounts as clarified under Section 15(2) and the benefits as contained in Section 15(3). Recourse to Section 15 Sub-Section 4 can be taken only when the value of the supply of goods cannot be determined under Sub-Section 1. In the present case, the value of the supply of goods is clear from the transaction value as indicated in the tax invoice which is on record and there being nothing on record to demonstrate that the said tax invoice was not acceptable to the respondents for any reason, as such, there are no hesitation in holding that in view of Explanation 2, Rule 138 read with Section 15(1), the transaction value is the value which is indicated in the invoice. Considering the fact that the petitioner has to be treated as the owner of the goods in view of the law laid down in the case of M/S MARGO BRUSH INDIA AND OTHERS VERSUS STATE OF U.P. AND ANOTHER 2023 (1) TMI 1237 - ALLAHABAD HIGH COURT , there are no hesitation in holding that the orders impugned insofar as it imposes the burden on the petitioner to get the goods released in terms of Section 129(1)(b) of the Act is bad in law. The matter is liable to be remanded to the Assessing Authority to pass fresh orders treating the petitioner to be the owner of the goods in terms of the mandate of Section 129(1)(a) of the Act treating the valuation of the goods as specified in the invoice, however, as the petitioner is ready and willing to pay the liability in terms of Section 129(1)(a) of the Act, instead of remanding, it is deemed appropriate to direct the respondents to release the goods to the petitioners if the petitioners offer to pay two hundred percent of the tax payable on the goods valuing the same on the basis of the valuation as shown in the invoice - petition allowed by way of remand.

Summary

Issues involved:
The issues involved in the judgment are detention of goods due to absence of E-Way bill, jurisdiction of detaining authority to value goods, applicability of Section 129(1)(a) and Section 129(1)(b) of the U.P. GST Act, and determination of value of goods in transit.

Detention of Goods:
The petitioner ordered mixed ready-made garments which were being transported when intercepted and physically verified. Despite no discrepancy in the quantity, the goods were detained on 21.09.2022 for lacking an E-Way bill. The detention order did not follow the prescribed format, raising procedural concerns.

Jurisdiction and Valuation:
The detaining authority imposed a penalty on the goods without E-Way bill, questioning the authority's jurisdiction to value the goods. The petitioner argued that if Part - B of the E-Way Bill was not carried, no penalty should be imposed. The petitioner contended that the valuation of goods was done without proper jurisdiction.

Applicability of Sections 129(1)(a) and 129(1)(b):
The petitioner asserted that Section 129(1)(a) should apply instead of Section 129(1)(b) as they were the owner of the goods based on the invoice. It was argued that as consignor or consignee, the petitioner should be treated as the owner, making Section 129(1)(b) inapplicable.

Determination of Value of Goods:
The judgment analyzed Section 15 of the Act for the levy and collection of tax and the determination of the value of supply. Rule 138 of CGST Rules and Explanation 2 clarified the consignment value of goods based on the invoice, bill of supply, or delivery challan. The transaction value as per the tax invoice was deemed acceptable, and the petitioner was considered the owner of the goods.

Conclusion:
The impugned orders dated 26.09.2022 and 19.10.2022 were set aside as they imposed an incorrect burden on the petitioner under Section 129(1)(b) of the Act. The matter was directed to the Assessing Authority for fresh orders, but the respondents were instructed to release the goods upon the petitioner's offer to pay two hundred percent of the tax payable. The petitioner's readiness to pay under Section 129(1)(a) led to the release of goods, and the detained vehicle was to be released upon payment. The writ petition was allowed accordingly, and proceedings were to comply with Section 129(5) of the Act.