2023 (7) TMI 1005 - HC - GST

Demand of twice the value of goods alongwith taxes - goods to be not traceable to a registered dealer - ownership of goods of determined - HELD THAT - Prima facie it is shown to the Court that while the goods were in transit it accompanied the tax invoice and e-way bill which indicated the goods to be owned by the petitioner - The petitioner has otherwise raised a claim before the authorities regarding the ownership of goods in question. The order passed by the authorities, however, in no manner reflects application of mind on the question as to whether the petitioner is the owner of the goods in question or not. In the facts of the case, such consideration on the question as to who is the owner of the goods is clearly lacking. The department, therefore, would not be justified in proceeding to hold the goods not to belong to a registered dealer without dealing with the question of ownership of such goods in transit. A Division Bench of this Court in 2023 (6) TMI 360 - ALLAHABAD HIGH COURT after referring to previous judgments of this Court has observed that the question with regard to ownership of the goods be determined before levying penalty etc. The third respondent is directed to examine the petitioner's claim of ownership of goods, in accordance with the applicable circular and the provisions in law, and thereafter proceed afresh to determine the issue after affording opportunity of hearing to the petitioner - Petition allowed.

Summary

Issues Involved:
The issues involved in the judgment are the determination of ownership of goods in transit, the application of tax laws, and the proper procedure for resolving disputes regarding ownership in the context of tax liabilities.

Ownership of Goods in Transit:
The petitioner, a registered dealer engaged in sale and purchase of arecanut, claimed ownership of certain goods intercepted during transportation within the state of U.P. The goods were accompanied by tax invoices and e-way bill, indicating ownership by the petitioner. However, the department issued notices and passed orders determining tax liability without considering the petitioner as the owner of the goods. The petitioner argued that the department demanded twice the value of goods without proper consideration of ownership.

Application of Tax Laws:
The petitioner contended that the tax payable on the transit of goods is 5%, with penalties not exceeding 10% of the total value of goods. Despite this, the department demanded excessive amounts from the petitioner, disregarding the ownership claim and relevant documents accompanying the goods.

Proper Procedure for Resolving Ownership Disputes:
The circular issued by the department clarified that if specified documents accompany consigned goods, either the consignor or consignee should be deemed the owner. In the absence of such documents, the proper officer must determine the owner. The Court noted that the department failed to consider the ownership of goods in transit and proceeded to hold them not belonging to a registered dealer without proper assessment.

Conclusion:
The Court found that the department did not adequately address the question of ownership of the goods in question. Referring to previous judgments, the Court emphasized the need to determine ownership before levying penalties. The petition was allowed, directing the third respondent to reexamine the petitioner's ownership claim in accordance with the circular and relevant laws. The impugned order was quashed to facilitate a fresh determination of ownership with proper consideration and opportunity for the petitioner.