2020 (11) TMI 422 - HC - GST

Release of goods alongwith the vehicle - detention on the ground that the documents that accompanied the transportation of the goods were found to be defective - Section 130 of the CGST Act - HELD THAT - While the respondents were justified in detaining the goods and the vehicle, based on the material that was available with them which clearly showed that the transportation undertaken by the petitioners, of the goods in question, was not necessarily from Coimbatore as was declared in the invoice and the e-way bill that were produced by the petitioners, the said material does not point to any intention to evade tax, more so when, there is nothing to doubt the genuineness of the declaration of the petitioners that the goods were consigned to Gujarat from Coimbatore, or any material to suggest that the ultimate destination of the goods was any place other than Gujarat. It has to be noticed that the 1st petitioner had admitted his liability to IGST by declaring the same in the invoice, and if the goods, even assuming that they were loaded from Palakkad, were destined to Gujarat, it is the IGST that had to be paid by the 1st petitioner/consigner of the goods. It cannot be said that there was any intention to evade payment of tax because the tax liability, in either event, would be the same. That apart, there is no specific averment in the notice served on the petitioners, as regards any act or omission, that was suggestive of an intention to evade payment of tax - The proceedings initiated against the petitioners under Section 130 of the GST Act, cannot be legally sustained. The respondents shall permit the petitioners to clear the goods and the vehicle on furnishing a bank guarantee for the tax and penalty amounts determined, consequent to the detention of the goods and the vehicle - Petition disposed off.

Summary

Issues:
Detention of goods for defective documents, invocation of Section 130 of the GST Act, confiscation order challenged in writ petition.

Detention of Goods:
The petitioners, dealers in brass and copper scraps, faced detention of a consignment being transported from Coimbatore to Gujarat due to defective documents. The detention notice cited documents as the reason, despite the consignment having a tax invoice and e-way bill showing IGST payment and the transportation from Coimbatore to Gujarat. The respondents alleged the loading occurred in Palakkad, Kerala, not Coimbatore, justifying detention based on mismatched transportation details.

Confiscation Order under Section 130 of the GST Act:
The respondents invoked Section 130 of the GST Act, serving a notice on the petitioners and eventually passing an order of confiscation. The petitioners challenged this order, arguing against any intention to evade tax, especially as the consignment was legitimately destined for Gujarat, with IGST liability duly declared. The court found no evidence of tax evasion and quashed the confiscation order, directing the respondents to proceed under Section 129(3) of the GST Act instead.

Court's Decision:
The court ruled in favor of the petitioners, noting the lack of evidence suggesting tax evasion and the genuine declaration of the consignment's destination. The confiscation order under Section 130 of the GST Act was deemed legally unsustainable. The respondents were directed to issue orders under Section 129(3) after hearing the petitioners promptly. Additionally, the petitioners were allowed to clear the goods and vehicle upon furnishing a bank guarantee for determined tax and penalty amounts. A three-week grace period was granted post the final order under Section 129(3) to enable the petitioners to pursue appellate remedies if needed. The writ petition was disposed of with these directives for the respondents.