2021 (5) TMI 593 - HC - GST

Detention of goods under Section 129(1) of CGST Act - Invoice number mentioned in Tax invoice not tallied with E-way bill - HELD THAT - The issue some what identical to the case on hand came up for consideration before the Division Bench of this Court in ANNAM JEWELLERS VERSUS DEPUTY COMMERCIAL TAX OFFICER AND ANOTHER 1996 (3) TMI 492 - ANDHRA PRADESH HIGH COURT . In the said case, the Writ Petitioners were engaged in the business of gold and silver articles. The premises was inspected by the 1st Respondent, and on verification of the stocks, the inspecting authority got recorded statements from the writ petitioners to the effect that the petitioners were liable to pay tax under Section 6A of the Andhra Pradesh General Sales Tax Act, 1957, and accordingly, collected the tax as well as the penalty, which was five times that of the tax payable and the amount was collected by way of cheques. Later on, the action of the authority was challenged on the ground that the same is arbitrary and violative of principles of natural justice, and that no notice and opportunity was given to the dealers and no assessment was also made. Thus, it is very much clear that the action of the authorities in collecting the tax either on the spot or later, can always be challenged subsequently by questioning the jurisdiction or their authority to collect tax - this Writ Petition is allowed, holding that the Respondents were in error in collecting the tax and penalty from the Petitioner, for release of the goods seized.

Summary

Issues:
Detention of goods under Section 129(1) of CGST Act - Discrepancy between Invoice number and E-Way Bill.

Analysis:
1. The Writ Petitioner filed a petition seeking the issuance of a Writ of Mandamus against the 1st Respondent for detaining goods on transit from Maharashtra to Andhra Pradesh, imposing tax and penalty. The Petitioner, a registered GST Dealer, purchased Acid Oil from a dealer in Maharashtra for manufacturing purposes. The goods were detained due to a discrepancy in the Invoice number and E-Way Bill number.

2. The detention was based on the ground that the Invoice number did not match the E-Way Bill number, as a digit was incorrectly typed. The Petitioner argued that this error did not prejudice the tax collection process as IGST was duly paid. The Petitioner contended that the detention and imposition of tax and penalty were illegal, improper, and incorrect.

3. The Government Pleader for Commercial Taxes argued that challenging the detention through Article 226 of the Constitution was inappropriate when there was a remedy of Appeal available. The Pleader asserted that the variation in the Invoice number justified the detention.

4. The Petitioner's counsel countered that an Appeal could only be filed against an order, which was absent in this case. The central issue was whether the detention of goods under Section 129(1) of the CGST Act was justified.

5. The Notice for detaining goods cited the discrepancy in the Invoice and E-Way Bill numbers as the reason. The Circular issued by the Government clarified that minor errors in the document number of the E-Way Bill might not warrant detention under Section 129 of the CGST Act.

6. Referring to the Circular, the Court found that the tax collection in this case was contrary to the Circular's provisions. The Petitioner had paid the tax and penalty to secure the release of essential goods, which were crucial for business operations.

7. The Court cited precedents where authorities collecting tax on the spot were challenged subsequently. In light of the Circular prohibiting penalties for minor errors in document numbers, the Court held that the Respondents erred in collecting tax and penalty from the Petitioner.

8. Consequently, the Writ Petition was allowed, ruling that the Respondents were wrong in collecting tax and penalty. The Respondents were directed to release the amount seized and proceed as per the Circular. No costs were awarded, and pending petitions were closed.