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TMI Blog2020 (8) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... he form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable - Under Rule 141 of the CGST Rules, any perishable goods seized shall be released forthwith by an Order in Form GST INS-05 if the taxable person pays an amount equivalent to the market price of such goods or things or the amount of tax, interest and penalty that is or may become payable whichever is lower. Thus, having regard to the scheme of the CGST Act and the rules, whenever perishable goods are seized, it is the duty of the seizing authorities to obtain a bond and or security or require the payment of the market price of the goods or the amount of tax, interest and penalty whichever is lower. This is precisely the reason that whenever such perishable goods are intercepted and detained under Section 129 of the CGST Act, the period for payment of tax and penalty in respect of perishable goods can be reduced to seven days. If the supplier has made outward movement of goods worth ₹ 73,00,00,000-00, then the recipients must have availed the tax credit and this could not have gone unnoticed by the department. This could be attributed to the lackadaisical attitude of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST MOV-06 (Annexure-B1) dated 07.03.2019. A notice under Section 129(3) of the CGST Act in Form GST MOV No.7 (Annexure- B2) dated 07.03.2019 was issued requiring the payment of tax of ₹ 2,12,100/- and penalty of ₹ 2,12,100/-. The petitioner claimed that the e-way bill and the invoice relating to the transport by another vehicle bearing registration number MH-09-C-4289 was handed over to the driver by mistake and that the correct e-way bill along with the invoice showing the payment of the Central Tax by the lorry bearing no. No.HR-55-AF-7882 was furnished before the Tax officials at Shimogga, which was not accepted. Thus, a payment challan and a mandate form for a sum of ₹ 4,24,200-00 towards inter-State tax of ₹ 2,12,100/- and penalty of ₹ 2,12,100/- was generated and paid on 08.03.2019. Since the vehicle was seized and parked in the Sagar APMC yard, Agricultural Produce Marketing Committee collected the cess and penalty payable under the Act from the supplier on 07.03.2019. Upon the payment of tax and penalty, the vehicle and the goods were released on 08.03.2019 as per Form GST MOV-05 (Annexure-B6). Thereafter, an intimation in GST Form DRC-03 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Writ Tax No.799/2017. He also relied upon the judgment in Jaspreet Kalra Vs. Union of India by the Uttarakhand High Court in (2019) 87 ITPJ (G) 570. He also relied upon the judgment of the Karnataka High Court in the case of Sri Sai Balaji Diggers vs. State of Karnataka in W.P.No.11932/2019 to contend that once the penalty under Section 129(5) of the CGST Act was paid, the proceedings have come to an end. He also relied upon the judgment of this Court in W.P.No.13839/2018 and the judgment in W.P.No.6445/2019. 5. The respondent filed a detailed statement of objections and enclosed therewith elaborate documents. A perusal of the documents enclosed along with the statement of objections would disclose that soon after the vehicle and the goods were released on 08.03.2019, the Deputy Commissioner of Central Tax, Shivamogga, addressed a letter dated 09.03.2019 (Annexure-R14) to the Assistant Commissioner of Central Tax, Bijapur, stating, .... after release of the vehicle, it has come to the notice of this office that the transporter has not paid the said amount through DRO-03, but has only submitted copy of challan for having paid the said amount. As the movement of goods (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized vehicle along with goods . 9. Pursuant thereto, the Superintendent of Central Tax, Sagar Range, Sagar, took custody of the vehicle and consignment on 14.03.2019. 10. Another letter dated 12.03.2019 (Annexure- R16) was addressed by the Commissioner of Central Tax, Mysuru, to the Additional Commissioner, Bengaluru, stating, ....On discreet enquiry made by the officers of Shivamogga Division, it appears that the same is non-existent and fictitious. Further, it is also noticed that the said supplier has carried out outward movement of goods worth ₹ 73 crore till 08.03.2019. As it is seen that the said supplier is a Migrated tax payer under the administration of State Government, it is requested to do necessary physical inspection of the premises and furnish a report so as to enable this office to carry out further investigation in this matter . 11. It is stated that on 12.03.2019, the premises of the registered supplier was inspected and it was found that the said supplier was not having his business in the premises, but, on the other hand, an entity named by M/s. Bhairaveshwara Enterprises was operating from the said premises. 12. A letter dated 12.03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to our notice that M/s. Venkataramana Traders has made transactions with the following assessee: M/s. M.M.Enterprises, Bengaluru. In view of the facts mentioned above, there is a reason to believe that the above mentioned unit may also be fictitious. To ascertain the reality of the transactions as mentioned above, it is requested to cross verify the address of unit mentioned under your jurisdiction i.e., M/s. M.M.Enterprises and the verification report along with spot mahazar in this regard may please be sent for further action at this end. 14. Contemporaneously, another letter dated 12.03.2019 (Annexure-R23) was addressed to the Commissioner of Central Tax, Ahmedabad, in respect of physical inspection of M/s. Pragathi Enterprises with whom the said M/s. Venkataramana Traders had dealt. 15. Following the above, the Principal Commissioner of Central Tax, Bengaluru, vide his letter dated 14.03.2019 (Annexure-R25) indicated that M/s. M.M.Enterprises was a fictitious entity and that action was initiated for cancellation of the registration of M/s. M.M.Enterprises. Likewise, the Commissioner of Central Excise, Ahmedabad, in terms of its letter dated 15.03.2019 (Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the petitioner had not challenged the Order of seizure dated 12.03.2019. 18. The counsel for the petitioner has filed a detailed rejoinder contending that it is a transporter and that it is under a contract of bailment to ensure the transportation of the goods to the destination. Further, as the vehicle belonging to the petitioner is seized along with the goods, the petitioner claimed it has the locus standi to present this writ petition. It contended that the seizure of the vehicles and the goods on 10.03.2019 evidenced by the issuance of GST MOV-2 indicated that it was a seizure under Section 129 of the CGST Act which was not permissible. It contended that the provision of Section 67 of the CGST Act cannot be invoked to seize goods which is in transit and even if it is permissible, then the seizure had to be in form GST INS-01. Further, it claimed that under Rule 140 of the Central Goods and Services Tax Rules, 2017 (henceforth referred to as the 'CGST Rules'), the tax officials were bound in law to obtain a bond and release the goods and having regard to the fact that the goods are perishable in nature, it was incumbent upon the authorities to release the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may,- (a) if such consignment is perishable in nature, have the right to sell the consignment; or (b) if such consignment is not perishable in nature, cause a notice to be served upon the consignee or upon the consignor if the consignee is not available, requiring him to remove the goods within a period of fifteen days from the date of receipt of the notice and in case of failure to comply with the notice, the common carrier shall have the right to sell such consignment without any further notice to the consignee or the consignor, as the case may be. (3) The common carrier shall, out of the sale proceeds received under sub-section (2), retain a sum equal to the freight, storage and other charges due including expenses incurred for the sale, and the surplus, if any, from such sale proceeds shall be returned to the consignee or the consignor, as the case may be. (4) Unless otherwise agreed upon between the common carrier and consignor, the common carrier shall be entitled to detain or dispose off the consignment in part or full to recover his dues in the event of the consignee failing to make payment of the freight and other charges payable to the common carrier a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculiar facts of this case, this Court is entitled to exercise jurisdiction to set right a palpable illegal proceeding. 24. On careful consideration of the averments made in the writ petition, counter, rejoinder and the arguments advanced, what emerges is that the vehicle and the goods were intercepted at Sagar for the first time for checking the e-way bills, purportedly in exercise of power under Section 68 of the CGST Act. The driver of the vehicle was carrying documents of another consignment and thus there was a mismatch. Thus, the vehicle was searched, the statement of the driver was recorded and the vehicle was detained and a notice under Section 129(3) was issued. The authorized representative appeared before the authorities at Sagar and handed over the correct e-way bill and the corresponding invoice. Yet, the authorities insisted and the petitioner paid the applicable IGST and the penalty. The vehicle was later released on 08.03.2019. Thus in view of Section 129 (3) of the Act, the proceedings in so far as the consignment was concerned stood concluded. 25. Later, on a reason to believe that the registered supplier at Nelamangala was not existing at the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e registered supplier was not doing business at the registered address and likewise the recipients were not found doing any business at the registered address. The department therefore sent out letters to freeze the bank account of the proprietor of the supplier and obtained information from the Income tax about the returns filed by him. 27. It is therefore clear that the department has initiated an action under Section 67 of the CGST Act to identify the fraudulent issue of invoice by the supplier to avail input tax credit. The respondent was not able to indicate the status of the enquiry under Section 67 of the CGST Act namely whether it had determined the input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts and or whether it had conducted a scrutiny of the returns filed by the supplier, and as to whether it had conducted an audit etc. A memo dated 30.07.2020 was filed enclosing the cancellation of the registration of the supplier with effect from 31.01.2019 28. However, the moot question is whether the department is entitled to seize a consignment of perishable goods in transit more particularly when it is accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case should be an eye opener for the State authorities under the Act to ascertain whether the registered establishments are doing business at the registered places and also to take pro active steps for the installation of Radio Frequency Identification devices as this would help the easy tracking of the movement of goods and for verification of e-way bills and the payment of tax etc. Thus, the revenue has to put its house in order and strive to achieve the lofty targets set by the CGST Act by effectively using the tools of audit, inspection, seizure, prosecution, recovery etc. 32. In view of the above and in the facts and circumstances of this case, it is held that in a proceeding under Section 67 of the CGST Act against the supplier, the respondent was not justified in seizing the perishable goods in transit, moreso when the goods had suffered tax and penalty. Hence, this writ petition is allowed and the respondent is directed to forthwith release the lorry bearing registration number HR-55-AF-7882 and the goods carried by it which is covered by the E-Way bill 181110112217. However, liberty is reserved for the proper authority under the CGST Act to continue the proceedings ini ..... X X X X Extracts X X X X X X X X Extracts X X X X
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