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TMI Blog2018 (7) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... sport. The intimation regarding the transport of goods to the Assessing Officer is not achieved by the mere issuance of a challan under Section 55. This would be achieved only if there is a declaration under Section 138, which would ensure that the transaction is not otherwise and there is no diversion of the goods. This would establish the bonafides of the assessee and the transport, which could very well be checked and verified by the Department. There is no dispute that in the present case the declaration uploaded was subsequent to the detention of the vehicle. This would not absolve the liability to tax and penalty under Section 129 - The violation would stand on a totally different footing, from a forged declaration or an incomplete or blank declaration accompanying the transport. Hence if the declaration as in this case, was infact uploaded prior to the transport the assessee could be absolved from the penalty but otherwise penalty is an automatic consequence. The time when such declaration was uploaded is crucial and a declaration made after the detention of the goods cannot lead to the assessee being absolved from the penalty. We cannot agree with the learned Single J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-downs at Ernakulam. These were to be installed in two sites at Gandhinagar at Kadavanthara and at Ambalappuzha. The vehicle in which the transport was made was detained. On examination of the documents, it was found that the goods were accompanied with a delivery chalan as provided under Rule 55 of the Kerala Goods and Services Tax Rules, 2017. However, the declaration as required under Rule 138 being KER-I, was not seen uploaded or the print out accompanied with the goods. The detaining officer issued a notice at Ext.P3 detaining the goods against which the writ petitioner was before this Court. In the other appeal the writ petitioner, dealer in surgical gloves, sent the goods for quality appraisal on job-works and was transporting the same to their business premises for further sale; when the vehicle was detained. 3. The learned Single Judge looked into the provisions defining taxable person and taxable supply as also Section 7 detailing the scope of supply to find that when a taxable person transports goods procured by them for own use to the site, where the goods are to be consumed, the transaction is not for consideration and would not even fall within the scope of Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier regime have been done away with and hence the stringent provisions also intended at deterrence of any attempt of evasion. The provisions of the Goods and Services Tax Act and the Rules framed there under have to be treated with the rigor it intends as against any violation; without reference to any mens rea, contumacious conduct or even a suspicion of attempt to evade tax. Section 129 is pointed out specifically to indicate that it is a non obstante clause which provides for detention and seizure in the case of any contravention of the provisions of the Act and the Rules. The release of goods so detained can be effected only on satisfying the conditions either at (a), (b) or (c) of Section 129(1). Sub-section (3) of Section 129 is the provision enabling adjudication; which again refers to subclause (a) to (c) of sub-section (1). Taxability or otherwise is inconsequential, argues the learned Senior Government Pleader, especially pointing out that even in the case of exempted goods, the contravention of the Act and the Rules would entail penalty equal to 2% of the value of goods or 25,000/- rupees which ever is less in the case in which the transporter or the owner of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will have to be employed as provided in the statute. 8. The learned Counsel for the two respondents, however, points out that Section 129 specifically speaks of penalty as relatable to the tax applicable equal to 100% of the tax payable on such goods. This would necessarily indicate that there can be no penalty imposed under Section 129 if the transaction itself is proved to be one having no tax liability. It is pointed out that in the earlier regime of tax on sale of goods there was a specific provision insofar as providing a penalty to the extent of twice the tax evaded if such evasion could be computed and in all other cases where computation is not possible, penalty to the maximum extent of ₹ 10,000/-. The earlier enactments specifically provided for a penalty, wherein the tax evasion could not be computed, which is not available in the scheme under Section 129. Though there is a general penalty applicable under Section 125, the officer detaining the goods under Section 129 would not have the power to impose such penalty. Hence on detention and notice issued even for a technical breach there would be an imposition of tax and penalty as provided under clause (a) or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being the transport accompanied with a incomplete form and the other being a total absence of document, which are to accompany the goods. The finding with respect to a civil liability was confined to those instances where there was an incomplete form. In the case of absence of documents, the Hon'ble Supreme Court left it to be considered in the light of the judgment in State of Rajasthan v. D.P.Metals [(2002) 1 SCC 279]. As held by the Hon'ble Supreme Court, the breach cannot be one merely of a technical or venial nature but postulates mens rea . In the present cases, where there was absence of the declaration under KER-1, it cannot be said that there is only a technical or venial breach and there should definitely be a guilty mind and a malafide intention. 11. CST v. Sanjiv Fabrics [(2010) 9 SCC 630] is also pressed into service to argue that if a prosecution is inevitable on detection of an offence, it could not be said to be one of civil liability. Section 132(1)(h) of the SGST Act is pointed out to indicate that a transport, in contravention of the Act and Rules, would invite prosecution. Section 135 is a presumption insofar as mens rea in circumstances c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery chalan, as produced by the assessee, indicated the assessee's case of a transaction on which no tax is payable which had to be supported by the uploaded declaration. 13. In W.A.No.371 of 2018, the goods transported were said to have been purchased by the assessee inter-State and stored in his godown. The instant transport was allegedly to the work site of the assessee for installation of the goods at such work site. In W.A.No.699 of 2018, the assessee had purchased goods, then entrusted it for job work and was transporting it to its own business premises for further sale. Both produced delivery chalan issued by them. The delivery chalan having been produced, the transaction was found to be one having no tax liability; which necessarily required a declaration in Form KER-1. Sub-section (3) of section 55 specifically speaks of a declaration as specified in Rule 138, when goods are transported on a delivery chalan in lieu of invoice. This specifically is a violation of the Act and Rules and we cannot agree with the learned Single Judge that the genuineness of the delivery chalan was accepted by the department. A delivery chalan, under section 55, is not one issued by the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the documents were not false or forged, there could be raised no allegation of evasion of tax. 16. In Guljag Industries the Court first considered the detention and imposition of penalty; in the context of production of a blank declaration signed by the consignee. On an examination of the provisions in the statute it was found that every import of taxable goods has to be accompanied with a declaration in Form ST 18-A completely filled in, in all respects, which has to be produced by the driver suo motu at the check post on inspection. The declaration is in duplicate, the original of which, the competent officer at the check post has to forward to the Assessing Officer. It was also noticed that the Form in which the declaration has to be made is issued by the Department, which has two parts one to be filled in by the consignee and the other by the consignor. The consignee having signed it without entering the material particulars of the goods, it was held, the declaration itself becomes meaningless for reason of the identity description of goods transported, having not been disclosed. Without these material particulars there could be manipulation of value and also mult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emedy for recovery of the loss caused to the State by such contravention . 19. The dichotomy as noticed by the Supreme Court and emphasised by the learned Counsel for the respondents is insofar as the declaration as to strict civil liability, for having failed to comply with the statutory obligation, being applicable only to cases in which there was blank/incomplete declaration form accompanying the goods. In cases in which there are no documents accompanying the goods in movement, the law laid down in State of Rajasthan Vs D.P. Metals (2002) 1 SCC 279 was held to hold the field. D.P. Metals is a case in which a manufacturer of stainless steel sheets was faced with penalty proceedings by reason of absence of declaration in Form ST 18-A, on inspection of a truck carrying goods. The Court held that when there are false or forged declaration submitted to the competent officer then penalty under Section 78 (5) would be leviable. There is then a reasonable cause for a presumption to be raised of motive to mislead the authorities. However in such cases the presumption would be rebuttable, by the assessee on production of requisite documents referred to in the provision. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn. In the present regime there is a virtual site maintained by the Department where in the forms are to be uploaded; which serves as intimation to the Assessing Officer. 21. In the present case the delivery chalan which accompanied the transport is one issued by the assessee respondent, over which the assessee has absolute control and could be subject to manipulation. The assessee having transported the goods with delivery chalan, could very well sell the goods if the transport is undetected and then tear it up, as also issue a chalan with the same number for the next transport. The intimation regarding the transport of goods to the Assessing Officer is not achieved by the mere issuance of a chalan under Section 55. This would be achieved only if there is a declaration under Section138, which would ensure that the transaction is not otherwise and there is no diversion of the goods. This would establish the bonafides of the assessee and the transport, which could very well be checked and verified by the Department. 22. The exercise of speculation is insofar as there could have been a sale of batteries or the surgical gloves by the assessee, when there was no declaration uploa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depends on the object of the statute and the language employed in the provision of the statute creating the offence. There is no gainsaying that a penal provision has to be strictly construed on its own language . The offence alleged in the cited case law was purchase of goods on the strength of C forms; which goods were not included in the registration certificate. The defence set up was that there was a bonafide mistake touching upon the description of the goods included in the registration certificate and the Department had been permitting such purchases in the previous years. The learned Judges held so, with reference to the specific statutory provisions in paragraphs 30 31: 30. To put it succinctly, in examining whether mens rea is an essential element of an offence created under a taxing statute, regard must be had to the following factors: ( i) the object and scheme of the statute; ( ii) the language of the section; and ( iii) the nature of penalty. 31. It is true that the object of Section 10(b) of the Act is to prevent any misuse of the registration certificate but the legislature has, in the said section, used the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he site as an intimation to the Department of the transport of such goods raises a reasonable presumption of asttempt to evade tax, against the respondents herein. We cannot agree with the learned Single Judge that merely because there was no suspicion raised against the delivery challan there is an admission of non-taxability of the goods transported. The finding that the transaction would not fall within the scope of taxable supply under the statute, cannot be sustained for reason of there being no declaration made under Rule 138. The resultant finding that mere infraction of the procedural rules cannot result in detention of goods though they may result in imposition of penalty cannot also be sustained. If the conditions under the Act and Rules are not complied with, definitely Section 129 operates and confiscation would be attracted. The respondents are entitled to an adjudication, but they would have to prove that in fact there was a declaration made under Rule 138 before the transport commenced. If they do prove that aspect, they would be absolved of the liability; otherwise, they would definitely be required to satisfy the tax and penalty as available under Section 129. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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