2024 (9) TMI 1010 - HC - GST

Levy of tax and penalty on detained goods - no intention to avoid the payment of tax - HELD THAT - The record shows that the goods in question were accompanying with the documents i.e. Tax invoice, GR and Eway Bills. In the E-way bill, the dispatch place is specifically mentioned as Ghaziabad UP. Further the records shows that after detention of the goods, a reply was submitted by the petitioner wherein, in para 3, it was specifically mentioned that purchase was made from Ghaziabad dealer and therefore due entries has been made in its purchase account. This fact has not been denied at any stage. Merely because that the E-way bill was issued by the Ghaziabad dealer on the purchase made by the petitioner, this will not make that the goods was purchased from non bonafied dealer. The State respondent has failed to bring on record any material to show that the goods were purchased from non bona fied dealer. The movement of the goods in question is shown by the petitioner of which tax invoice and E-way bill was issued in which in the place of dispatch, it was specifically mentioned as Ghaziabad. The GR has also been issued. The record further reveals that no discrepancy whatsoever with regard to quality, quantity or specification i.e. MS scrap, was found otherwise. In the present case, the petitioner was present before the respondent authority, therefore, the proceedings ought not to be initiated under Section 129 (1) (b) of the Act. When consignor with the tax invoice and e-way bill claim himself to be the owner of the goods, the provisions of Section 129(1)(b) of the Act could not be invoked. The impugned orders cannot be sustained in the eyes of law and same are hereby quashed - Petition allowed.

Summary

Issues:
Petitioner seeking relief through a writ petition against an order imposing tax and penalty on detained goods.

Analysis:
The petitioner, a registered dealer in MS scrape, sold goods to a buyer in Uttarakhand with proper documents. The goods were intercepted during transit, leading to detention and imposition of tax and penalty. The petitioner contended that all required documents were in order, as per GST Act and Rules. The petitioner argued that the detention was unjustified, citing relevant circulars and judgments supporting their case. The respondent, however, claimed that the petitioner's actions were contradictory and intended to evade tax. After reviewing the records, the Court found that the goods were accompanied by valid documents, and there was no evidence of tax avoidance. The Court noted that the respondent failed to prove any malintent or discrepancies in the transaction. The circulars referred to by the petitioner supported their claim that proper documents were in order, and the detention was unwarranted.

The Court highlighted the circular stating that if specific documents accompany the goods, the consignor or consignee is deemed the owner. The petitioner's presence before the authority indicated compliance, and proceedings under a specific section were deemed inappropriate. Referring to previous judgments, the Court emphasized that penalties should not be imposed when the consignor claims ownership with valid documents. Based on the facts and legal precedents, the Court quashed the impugned orders, ruling in favor of the petitioner. The writ petition was allowed, directing the refund of any deposited amount within a specified timeframe.