2022 (11) TMI 391 - HC - GST

Violation of principles of natural justice - seeking release of goods - discrepancy of goods being transported - Expired E-Way bill - Section 129(1)(b) of JGST Act, 2017 - HELD THAT - It is true that neither the State Tax Officer nor Appellate Authority has examined the plea raised by the petitioner based on GPS tracking report of the vehicle. The impugned orders have been passed without taking into consideration the explanation and defence taken by the petitioner in their reply before the Tax Officer in response to the show-cause notice under GST MOV 07. The State Tax Officer has only taken into consideration one of the plea that the driver was illiterate/semi-literate and did not realize the consequences of expiry of e-way bill. The impugned order also does not reflect due consideration of plea taken by the petitioner based on GPS tracking report of the vehicle. The impugned orders therefore have been passed without proper application of mind and without dealing with the contention raised by the petitioner. It suffers from violation of principles of natural justice. The statements made at para-11 of the counter affidavit by the respondent regarding the mismatch in the quantity of goods with the Invoices are not substantiated by the physical verification report issued by the department in Form GST MOV- 04 (Annexure-7). The impugned action has entailed penalty without due consideration of the plea raised by the petitioner and without proper application of mind. As such, both the orders passed by the State Tax Officer (Annexure- 10) dated 12th July, 2018 and the appellate order dated 26th July, 2018 (Annexure-14) are set aside - the matter is remanded to the State Tax Officer to consider the plea raised by the petitioner in its reply and the plea based upon the amended Rule 138(3) of JGST Rules, 2017 brought into force with effect from 7th March, 2018 by notification dated 30th March, 2018, in accordance with law. Petition allowed by way of remand.

Issues Involved:
1. Legality of the penalty imposed under Section 129(1)(b) of CGST Act.
2. Validity of seizure and detention of goods.
3. Consideration of GPS tracking report and other evidences.
4. Applicability of amended Rule 138(3) of JGST Rules, 2017.
5. Allegation of mismatch in the quantity of goods with invoices.
6. Violation of principles of natural justice.

Issue-wise Detailed Analysis:

1. Legality of the Penalty Imposed Under Section 129(1)(b) of CGST Act:
The petitioner challenged the penalty of Rs. 8,25,828/- imposed by the State Tax Officer under Section 129(1)(b) of the CGST Act. The penalty was confirmed by the Joint Commissioner of State (Appeal), Jamshedpur Division. The penalty was imposed due to the expiry of the E-Way bill during the transportation of goods. It was argued that the penalty was imposed without proper verification of the facts and evidence provided by the petitioner, including the GPS report.

2. Validity of Seizure and Detention of Goods:
The petitioner sought a declaration that the entire exercise of seizure and detention of goods was illegal and without jurisdiction. The vehicle carrying goods was intercepted on 6th July 2018, and a show-cause notice was issued on 7th July 2018, alleging transportation without a valid E-Way bill. The petitioner contended that the goods had reached the destination within the validity period of the E-Way bill but were temporarily taken back due to space constraints at the warehouse.

3. Consideration of GPS Tracking Report and Other Evidences:
The petitioner provided a GPS tracking report showing that the vehicle had reached the ITC warehouse before the expiry of the E-Way bill and remained stationary at a nearby location due to space constraints. The State Tax Officer and the appellate authority failed to consider this evidence. The court noted that the impugned orders did not reflect due consideration of the GPS tracking report, which vitiated the orders on factual grounds.

4. Applicability of Amended Rule 138(3) of JGST Rules, 2017:
The petitioner argued that under the amended Rule 138(3) of JGST Rules, 2017, effective from 7th March 2018, an E-Way bill was not required for transportation within a distance of 50 Kms within the state. This amendment was not considered by the State Tax Officer or the appellate authority while imposing the penalty. The court directed the State Tax Officer to consider this plea in accordance with the law.

5. Allegation of Mismatch in the Quantity of Goods with Invoices:
The respondent's counter-affidavit alleged a mismatch between the quantity of goods and the invoices. However, the court found that this allegation was not substantiated by the physical verification report. The court noted that the physical verification report did not indicate any mismatch, thereby discrediting the respondent's contention.

6. Violation of Principles of Natural Justice:
The court observed that the impugned orders were passed without proper application of mind and without addressing the contentions raised by the petitioner, including the GPS tracking report. This constituted a violation of the principles of natural justice. The court emphasized that the orders were issued without considering the petitioner's defense, leading to an unjust imposition of penalty.

Conclusion:
The court set aside the orders passed by the State Tax Officer and the appellate authority, citing a lack of proper consideration of evidence and violation of principles of natural justice. The matter was remanded to the State Tax Officer for reconsideration in light of the petitioner's pleas and the amended Rule 138(3) of JGST Rules, 2017. The court also directed the return of the Bank Guarantee furnished by the petitioner if not encashed. The writ petition was allowed, and the court clarified that its observations should not prejudice the fresh decision by the State Tax Officer.

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