2025 (1) TMI 1362 - HC - GST

Levy of penalty u/s 129 of WBGST Act 2017 - alleged discrepancies in transportation documentation and invoice - whether the respondents have rightly invoked the provisions of Section 129 of the West Bengal Goods and Services Tax Act 2017 or not? - HELD THAT - In the present case Input Tax Credit on the car has already claimed and utilized by M/s MMD Brothers Enterprise Proprietor Mr. Marto Lollen Arunachal Pradesh on the very first instance thus this Court is of the view that the margin value scheme is not applicable in the case of the petitioner. This Court considered the judgments relied by the petitioner but finds that the judgments as distinguishable from the facts and circumstance of the present case. In the present case after interception of the conveyance the respondent no.2 has followed all the procedure by issuing notice to the petitioner and proper opportunity was provided to the petitioner. It is found from record that documents relied by the petitioner are contrary to each other. The petitioner failed to prove that M/s Shifting Gears Assam has purchased the said vehicle from Mr. Marto Lollen. The e-way bill relied by the petitioner for transportation of the car contrary to the Invoice cum Bill of Supply dated 13th May 2023 and subsequent invoice submitted by the petitioner shows that no Tax was paid. Conclusion - The invocation of Section 129 was appropriate given the inconsistencies in the transportation documentation and the failure to establish a clear chain of ownership and sale. This Court did not find any illegality in the order passed by the respondent no. 2 dated 30th May 2023 and thus the order does not require any interference - Petition dismissed.

ISSUES PRESENTED and CONSIDERED

The primary issue considered in this judgment is whether the respondents rightfully invoked the provisions of Section 129 of the West Bengal Goods and Services Tax Act, 2017, in detaining the vehicle and imposing a penalty. The core question revolves around the legality and correctness of the detention and penalty imposed under the GST framework due to alleged discrepancies in transportation documentation and classification of the vehicle.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

Section 129 of the West Bengal Goods and Services Tax Act, 2017, governs the detention, seizure, and release of goods and conveyances in transit. It allows for detention if goods are transported in contravention of the Act or related rules. The section outlines the conditions for release of detained goods upon payment of applicable taxes and penalties. Additionally, the court examined the applicability of the Notification No. 8/2018-Central Tax (Rate) and Notification No. 1/2018-Compensation Cess (Rate), which clarify conditions under which input tax credit can affect the tax treatment of old and used motor vehicles.

Court's Interpretation and Reasoning

The court interpreted Section 129 as applicable when there is a contravention of the Act or rules during the transportation of goods. The court noted that the petitioner failed to provide consistent and valid documentation to support the claim that the car was a second-hand vehicle subject to reduced tax treatment. The court also highlighted the discrepancies in the e-way bill and invoices presented by the petitioner, which were inconsistent with the claims made regarding the vehicle's sale and transportation.

Key Evidence and Findings

The court found that the e-way bill indicated transportation from Assam to Haryana, which contradicted the petitioner's claim that the vehicle was purchased from Shifting Gears, Assam, and was to be delivered to Mumbai. The court also noted the absence of a valid tax invoice at the time of interception and inconsistencies in the invoices provided. The petitioner failed to demonstrate that Shifting Gears, Assam, had purchased the vehicle from Mr. Marto Lollen, and the documents provided were contradictory.

Application of Law to Facts

The court applied Section 129 by considering the discrepancies in the transportation documents and the failure to establish a clear chain of purchase and sale for the vehicle. The court determined that the invocation of Section 129 was justified due to the lack of valid documentation and the inconsistencies in the petitioner's submissions.

Treatment of Competing Arguments

The petitioner argued that the vehicle was a second-hand car subject to reduced tax treatment and that the penalty was miscalculated. However, the court found that the petitioner did not provide sufficient evidence to support these claims. The court also considered the petitioner's reliance on various judgments but found them distinguishable from the current case due to differing factual circumstances.

Conclusions

The court concluded that the respondents acted within their rights under Section 129 to detain the vehicle and impose a penalty due to the discrepancies and lack of valid documentation. The court dismissed the petition, finding no illegality in the order passed by the respondent.

SIGNIFICANT HOLDINGS

The court held that the invocation of Section 129 was appropriate given the inconsistencies in the transportation documentation and the failure to establish a clear chain of ownership and sale. The court emphasized the importance of accurate documentation in GST compliance and the consequences of failing to adhere to statutory requirements.

The court's decision underscores the principle that proper documentation and compliance with GST regulations are critical in transactions involving the movement of goods across state lines. The final determination was that the order of detention and penalty did not require interference, and the petition was dismissed.

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