2025 (1) TMI 205 - HC - GST

Challenge to order issued u/s 130 of the CGST/SGST Act - petitioner's registration had been canceled prior to the proceedings - transportation of goods without proper documentation - HELD THAT - The petitioner has not made out any case for interference with Ext.P4. Admittedly certain goods were being transported without the cover of any documents. The case of the petitioner that he is a dealer whose registration had already been canceled and the goods that were being transported are items, the expiry date of which was already over and the goods have been taken over/purchased by a person named Lohi cannot be accepted for more reasons than one. Even assuming that the case of the petitioner now put forth before this Court is correct, the registered person ought to have transported the goods under cover of proper documents. The fact that the registration of the petitioner was canceled does not absolve him of the liability to comply with the provisions of the GST laws and even on the petitioner s own showing there was a sale of goods by the petitioner to the registered person for a consideration of Rs. 1,90,000/-. Therefore it cannot be said that the proceedings under Section 130 were wrongly initiated and concluded against the petitioner. Conclusion - Cancellation of registration does not exempt a person from compliance with GST provisions. Proper documentation is mandatory for the transportation of goods. Petition dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the proceedings under Section 130 of the CGST/SGST Act against the petitioner were valid, given that the petitioner's registration had been canceled prior to the proceedings.
Whether the petitioner could be held liable for the transportation of goods without proper documentation, despite the cancellation of their registration.
Whether the imposition of penalty and fine in lieu of confiscation was justified under the circumstances.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Proceedings under Section 130

Relevant Legal Framework and Precedents: Section 130 of the CGST/SGST Act deals with confiscation of goods or conveyances and levy of penalty for contraventions of the Act. The legal question was whether these provisions could be applied to a person whose registration had been canceled.
Court's Interpretation and Reasoning: The court noted that the cancellation of registration does not absolve the petitioner from complying with the GST provisions. The fact that the petitioner engaged in a transaction for consideration indicates that the proceedings were appropriately initiated.
Key Evidence and Findings: The petitioner's goods were transported without documentation. The petitioner claimed the goods were sold to a registered person, Mr. Lohi, but provided no supporting documents.
Application of Law to Facts: The court applied Section 130, emphasizing the need for compliance with documentation requirements irrespective of registration status.
Treatment of Competing Arguments: The petitioner argued that the proceedings were without jurisdiction due to canceled registration, but the court found this unpersuasive.
Conclusions: The proceedings under Section 130 were validly initiated and concluded against the petitioner.

Issue 2: Liability for Transportation without Documentation

Relevant Legal Framework and Precedents: The CGST/SGST Act requires proper documentation for the transportation of goods to ensure tax compliance.
Court's Interpretation and Reasoning: The court reasoned that the lack of documentation was a clear violation of the Act, and the petitioner's registration status did not exempt him from this requirement.
Key Evidence and Findings: The petitioner did not provide any transport documents, and his initial statement contradicted his later claims.
Application of Law to Facts: The court applied the requirement for documentation to the facts, finding the petitioner liable for the violation.
Treatment of Competing Arguments: The petitioner's financial difficulties and personal circumstances were noted but did not influence the legal requirement for documentation.
Conclusions: The petitioner was liable for transporting goods without the necessary documentation.

Issue 3: Justification for Penalty and Fine

Relevant Legal Framework and Precedents: Section 130 allows for penalties and fines in lieu of confiscation for violations.
Court's Interpretation and Reasoning: The court found the imposition of penalties and fines justified due to the clear contravention of the Act.
Key Evidence and Findings: The petitioner admitted to the transaction and transportation without documentation.
Application of Law to Facts: The penalties and fines were applied in accordance with the provisions of the Act.
Treatment of Competing Arguments: The petitioner's arguments regarding financial hardship were acknowledged but did not negate the legal violations.
Conclusions: The penalties and fines imposed were justified under the circumstances.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The fact that the registration of the petitioner was canceled does not absolve him of the liability to comply with the provisions of the GST laws..."
Core Principles Established: Cancellation of registration does not exempt a person from compliance with GST provisions; proper documentation is mandatory for the transportation of goods.
Final Determinations on Each Issue: The court dismissed the writ petition, upheld the validity of the proceedings under Section 130, confirmed the liability for transportation without documentation, and justified the penalties and fines imposed.

The petitioner is granted the liberty to file an appeal against the Ext.P4 order, with the period during which the writ petition was pending being excluded for calculating the limitation period for filing an appeal.

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