2020 (2) TMI 171 - HC - GST

Release of petitioner goods without collecting any tax or penalty or security under S.129(1)(c) - discrepancy in E-way bill - HELD THAT - The matter in relation to the detention of the goods as per the impugned Ext.P7 proceedings will have to be subjected to adjudication proceedings and only thereafter it can be finalised. Therefore, this Court need not make any final pronouncement on any of the above said issues. It is for the petitioner to raise all those contentions as and when he is given opportunity of hearing prior to the finalisation of the adjudication proceedings pursuant to the detention proceedings referred to in Ext.P7. The respondents do not have any case that the petitioner concern has any previous adverse records of tax evasions of non-compliance of the tax laws. The above said contentions raised by the petitioner on the basis of Ext.P2 E-Way bill is substantially strong to persuade this Court that the goods could be released on condition that the petitioner executes a simple bond in that regard. Hence, it is ordered that the 1st respondent shall immediately release the goods and vehicle detained pursuant to Ext.P7 order to the petitioner on the petitioner executing a simple bond in that regard. However, the 1st respondent will be at liberty to proceed further with the adjudication proceedings in relation to Ext.P7 order and for that purpose, notice of hearing may be given to the petitioner and the petitioner should be permitted to give detailed written submissions in the matter. It is ordered that all the contentions raised by the petitioner herein and any of the contentions that may be raised by the petitioner before the 1st respondent should be duly adverted to and considered by the 1st respondent before he passes orders finalising the adjudication proceedings in that regard. It is ordered that the goods and vehicle detained pursuant to Ext.P7 shall be released forthwith by the 1st respondent to the petitioner, on his executing a simple bond and without insisting on the petitioner furnishing bank guarantee for the demanded value - the 1st respondent will take necessary action to comply with the other directions for the finalisation of the adjudication proceedings pursuant to Ext.P-7. Petition disposed off.

Summary

Issues:
Detention of goods under Sec.129 of GST Act due to alleged tax evasion; Validity of tax invoice and E-Way bill discrepancies; Applicability of penal proceedings under Sec.126 of GST Act for minor breaches; Liability to pay tax on interstate supply under IGST Act; Release of goods on execution of a simple bond.

Analysis:
1. Detention of Goods under Sec.129 of GST Act: The petitioner, a dealer in plywood, faced detention of goods under Sec.129 of the GST Act by the 1st respondent due to alleged tax evasion. The petitioner contended that the detention was unwarranted as the supplier had inadvertently shown CGST and SGST instead of IGST in the tax invoice, but the correct IGST amount was reflected in the E-Way bill. The petitioner argued that clerical errors should not lead to presumptions of tax evasion, especially when the E-Way bill accurately depicted the tax details. The petitioner also highlighted the provisions of Sec.126 of the GST Act, emphasizing that penal proceedings should not be initiated for minor breaches or mistakes in documentation.

2. Validity of Tax Invoice and E-Way Bill Discrepancies: The discrepancy between the tax details in the invoice and the E-Way bill was a crucial point of contention. The petitioner stressed that the E-Way bill, being the fundamental document proving the correctness of goods transported, accurately reflected the IGST amount. The petitioner argued that the clerical error in the invoice should not prejudice the revenue, as the returns would rectify such errors. The petitioner's counsel presented detailed arguments supported by legal principles to establish that the alleged discrepancies did not amount to tax evasion.

3. Applicability of Penal Proceedings under Sec.126 of GST Act: The petitioner invoked Sec.126 of the GST Act to argue against the initiation of penal proceedings for minor breaches or mistakes in documentation. Emphasizing the correct generation of the E-Way bill and the absence of intent to evade tax, the petitioner sought the release of goods without payment of tax and penalty. The legal counsel reiterated that the core legal principles under Sec.126 should guide the resolution of the case, highlighting the importance of factual and legal considerations in such matters.

4. Liability to Pay Tax on Interstate Supply under IGST Act: The case involved the liability to pay tax on interstate supply of goods under the IGST Act. The petitioner contended that the supplier, being a registered taxable person in Tamil Nadu, was responsible for collecting and paying the IGST involved in the sale. The petitioner argued that the provisions of the GST Acts and Rules were explicit, and any apprehension regarding tax prejudice to the State of Kerala due to invoice description errors was unfounded. The petitioner emphasized compliance with tax regulations and proper filing of returns to claim input tax credit.

5. Release of Goods on Execution of a Simple Bond: After careful evaluation of the facts and contentions presented by both sides, the Court decided that the goods and vehicle detained could be released to the petitioner on the basis of a simple bond. The Court rejected the requirement for a bank guarantee and directed the immediate release of the goods. The Court also allowed for further adjudication proceedings but ordered the release of goods pending the finalization of such proceedings, emphasizing the petitioner's compliance and the absence of prior adverse records of tax evasion.