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2025 (3) TMI 249 - HC - GSTSeizure of goods on the ground of under valuation - sufficient evidence to prove the actual movement of goods from West Bengal/Assam to Delhi via Kanpur or not - burden to prove - power to seize goods - HELD THAT - Under the taxing statute in the original proceeding or in the summary proceeding the primary burden is to be discharged by the assessee by bringing on record the cogent material. The burden of proof is shifting to the department only in the re-assessment proceeding or subsequent proceeding not being the original proceeding. In other words the assessee in the original proceeding is duty bound to bring the material on record in support of its claim but in the subsequent proceeding i.e. re-assessment proceedings the burden shifts on the revenue - Under the taxing statute in the original proceeding or in the summary proceeding the primary burden is to be discharged by the assessee by bringing on record the cogent material. The burden of proof is shifting to the department only in the re-assessment proceeding or subsequent proceeding not being the original proceeding. In other words the assessee in the original proceeding is duty bound to bring the material on record in support of its claim but in the subsequent proceeding i.e. re-assessment proceedings the burden shifts on the revenue. The Hon ble Apex Court in the case of State of Karnataka Vs. M/s Ecom Gill Coffee Trading Pvt. Ltd. 2023 (3) TMI 533 - SUPREME COURT has held that burden was upon the dealer to prove beyond doubt its claim. Further the Apex Court has emphasised in the said judgement that if the dealer is claiming any exemption then burden to prove the genuineness of the transaction is upon the person claiming the benefit. On that background the Hon ble Apex Court has held that dealer has to prove the actual physical movement of the goods. Following the said judgement this Court in the case of M/s Shiv Trading Vs. State of UP and Others 2023 (11) TMI 1157 - ALLAHABAD HIGH COURT has held that onus to prove and establish beyond doubt the actual transaction physical movement of the goods as well as genuineness of transaction is required. In the case in hand the petitioner was duty bound to establish beyond doubt the actual physical movement of the goods from West Bengal / Assam to Delhi via Kanpur but the petitioner has failed to do so therefore accompanying tax invoices and other documents cannot said to be genuine. In other words it is a clear case of contravention of Act as well as the Rules - The petitioner has failed to bring on record any material to show actual movement of the goods from West Bengal / Assam. The details of truck number or toll receipt crossed during its journey from West Bengal / Assam to Kanpur have not been filed at any stage. The petitioner even failed to bring on record any cogent material to show actual movement of the goods. Once the actual journey as claimed by the petitioner was not proved the proceedings cannot be said to be illegal or arbitrary - Section 129 of the GST Act refers that any person transports any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder the said goods shall be liable to be detained or seized. A Division Bench of this Court in the case of M/s Shiv Shakti Trading Company Vs. State of UP and Others 2011 (5) TMI 874 - ALLAHABAD HIGH COURT has an occasion to upheld the seizure of the goods being made on the ground of under valuation. The Division Bench has held that it is incumbent on a person who is transporting goods to declare the true value of the goods and failure to declare the same would result non proper document in the context of the valuation therefore the power of seizure of goods has correctly been exercised against the petitioner. Conclusion - i) Under-valuation with intent to evade tax justifies seizure under the GST Act. ii) The seizures were lawful and the petitioner failed to provide necessary evidence to challenge the findings of the respondent authorities. Thus no interference is called for by this Court in the impugned order - petition dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Seizure of Goods under Section 129(3) of IGST/CGST Act Relevant Legal Framework and Precedents: Section 129(3) of the GST Act allows for the detention or seizure of goods in transit if they contravene the provisions of the Act or rules made thereunder. The petitioner argued that under-valuation is not a valid ground for seizure, citing various judgments, including those from the Chhattisgarh and Kerala High Courts. However, the Court referred to precedents like M/s Radha Fragrance and M/s Shiv Shakti Trading Company, which upheld seizures on grounds of under-valuation when it was deliberate to avoid tax. Court's Interpretation and Reasoning: The Court emphasized that the statutory framework requires true and correct valuation of goods on tax invoices. It found that the petitioner failed to demonstrate the actual movement of goods from West Bengal/Assam to Delhi, which was crucial to establishing the genuineness of the transaction. Key Evidence and Findings: The authorities noted discrepancies between the truck driver's statement and the accompanying documents, which suggested that the goods were loaded from Kanpur, not West Bengal/Assam. The petitioner failed to provide truck numbers, toll receipts, or other evidence to substantiate the claimed route of transport. Application of Law to Facts: The Court applied the principles from previous judgments, asserting that the burden of proof lies on the petitioner to establish the actual movement and valuation of goods. The petitioner's inability to provide evidence justified the seizure under Section 129(3). Treatment of Competing Arguments: The petitioner argued against the legality of the seizure based on under-valuation, while the respondent emphasized the non-genuine nature of the documents and the driver's statement. The Court sided with the respondent, noting the petitioner's failure to rebut the driver's statement or provide supporting evidence. Conclusions: The Court concluded that the seizure was justified due to the petitioner's failure to prove the actual movement of goods and the deliberate under-valuation aimed at evading tax. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court highlighted, "The petitioner has utterly failed to bring on record any cogent material for transporting the goods from West Bengal / Assam to Delhi via Kanpur. Once the petitioner has failed to prove the true/actual movement of the goods, the seizure proceedings cannot be said to be unjustified." Core Principles Established: The judgment reaffirmed that under-valuation with intent to evade tax justifies seizure under the GST Act. It also emphasized the importance of genuine documentation and the burden of proof on the taxpayer to substantiate claims of goods movement. Final Determinations on Each Issue: The Court dismissed the writ petitions, holding that the seizures were lawful and the petitioner failed to provide necessary evidence to challenge the findings of the respondent authorities.
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