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TMI Blog2024 (10) TMI 1239X X X X Extracts X X X X X X X X Extracts X X X X ..... tion) may not be supported by any material. However, the question remains as to whether this should automatically lead to the initiation and conclusion of the proceedings under Section 129 of the CGST/SGST Acts resulting in the imposition of a huge amount as tax and penalty. The learned Government Pleader may be right in contending that there is justification for the initiation of proceedings under Section 129 of the CGST/SGST Acts in the facts of this case. However, once a plausible explanation is provided by the transporter/assessee, and it is found that there is no attempt to evade any tax, the question remains as to whether the proceedings must thereafter culminate in an order under Section 129 of the CGST/SGST Acts imposing the maximum penalty in terms of the provisions contained in Section 129 of the CGST/SGST Acts. While the initiation of the proceedings under Section 129 of the CGST/SGST Acts, in the facts of this case, cannot be found to be without jurisdiction, the fact remains that once the transporter/assessee had offered an explanation and had demonstrated that there was no attempt to evade tax and in the absence of any finding of an attempt to evade tax, the officer s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The vehicle in which the goods were being transported was intercepted by the 1st respondent on 25.10.2021 at 09:59 A.M. at Melmuri, Malappuram, and on the finding that the e-way bill referred to above had expired on 24.10.2021 proceedings were initiated against the petitioner under Section 129 of the CGST/SGST Acts. The proceedings culminated in Ext. P10 order imposing upon the petitioner the liability to pay tax and penalty totalling Rs. 3,76,824/- (Three lakhs seventy-six thousand eight hundred twenty-four only). 2. Sri. Hrithwik D. Namboodiri, the learned counsel appearing for the petitioner would submit that there is no finding in Ext. P10 that there was any attempt to evade tax. It is submitted that the only finding in Ext. P10 is that the e-way bill referred to above (which was generated on 23.10.2021 at 10:00 P.M), had expired at the time of detention. Learned counsel referred to the provisions of Sub-rule (10) of Rule 138 of the CGST/SGST Rules and to the third proviso to that Rule to contend that since the e-way bill was generated at 10:00 P.M on 23.10.2021, it expired by 10:00 P.M on 24.10.2021 (considering the distance involved in the transport of goods) and the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It is submitted that the authorities are insisting on revalidation/extension of the e-way bill only to ensure that multiple transports are not undertaken on the basis of the same e-way bill. It is submitted that, in the facts of the present case, the time for extending the e-way bill had expired by 06:00 A.M on 25.10.2021 and the interception was at 09:59 A.M on 25.10.2021. It is submitted that the petitioner was therefore clearly engaging in the illegal transport of goods, warranting the invocation of proceedings under Section 129 of the CGST/SGST Acts. It is submitted that the provisions of Section 126 of the CGST/SGST Acts may not apply in the light of the provisions contained in Sub-section (6) of Section 126 of the CGST/SGST Acts which indicates that the provisions of the section shall not apply where a penalty is specifically provided in any other provision either as a fixed sum or expressed as a fixed percentage. The provisions of Section 129 of the CGST/SGST Acts are also referred to, to point out that once the proceedings under Section 129 of the CGST/SGST Acts are initiated and it is found that there was a violation of the law in the transport of goods warranting det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the statutory scheme that aims to curb tax evasion. It is submitted that the decision in Podaran Foods India Pvt. Ltd (supra) is also an authority for the proposition that a person aggrieved by an order under Section 129 must necessarily approach the Appellate Authority in case he is aggrieved by the order. The learned Special Government Pleader seeks to distinguish the judgment of the Telangana High Court in Satyam Shivam Papers (supra) by stating that the decision turned on its own facts and the fact that the Special Leave Petition against the judgment was dismissed by a speaking order does not mean that the judgment is a binding precedent so far as this Court is concerned. It is submitted that the judgment in Satyam Shivam Papers (supra) is not authority for the proposition that intentional evasion of tax is sine qua non for imposing the penalty under Section 129 of the Act. It is submitted that Vardan Associates Pvt. Ltd. v. Assistant Commissioner of State Tax Central Section and Others; (2024) 3 SCC 187 is authority for the proposition that there could be no escape from the requirement of the law to generate a fresh e-way bill after its expiry. It is submitted that the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09:59 A.M on 25.10.2021. Technically, there is a violation of the law by the petitioner and the reason stated for transporting goods without revalidating the e-way bill (see paragraph 4 of the writ petition) may not be supported by any material. However, the question remains as to whether this should automatically lead to the initiation and conclusion of the proceedings under Section 129 of the CGST/SGST Acts resulting in the imposition of a huge amount as tax and penalty. The learned Government Pleader may be right in contending that there is justification for the initiation of proceedings under Section 129 of the CGST/SGST Acts in the facts of this case. However, once a plausible explanation is provided by the transporter/assessee, and it is found that there is no attempt to evade any tax, the question remains as to whether the proceedings must thereafter culminate in an order under Section 129 of the CGST/SGST Acts imposing the maximum penalty in terms of the provisions contained in Section 129 of the CGST/SGST Acts. While the initiation of the proceedings under Section 129 of the CGST/SGST Acts, in the facts of this case, cannot be found to be without jurisdiction, the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax due under this Act; (xi) is liable to be registered under this Act but fails to obtain registration; (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently; (xiii) obstructs or prevents any officer in discharge of his duties under this Act; (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf; (xv) suppresses his turnover leading to evasion of tax under this Act; (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder; (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; (xix) issues any invoice or document by using the registration number of another registered person; (xx) tampers with, or destroys any material evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (6) of Section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in subsection (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of such goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130: Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer." This was the provision applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under subsection (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less: Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer." Section 126 of the CGST/SGST Acts reads thus:- "126. Detention, seizure and release of goods and conveyances in transit.- (1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st try to find out the extent to which the legislature had intended to give one provision overriding effect over another provision. Such intention of the legislature in this behalf is to be gathered from the enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose [(1952) 2 SCC 237 : AIR 1952 SC 369 : 1953 SCR 1] Patanjali Sastri, J. observed: "The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously;" In Madhav Rao Scindia v. Union of India [(1971) 1 SCC 85] (SCC at p. 139) Hidayatullah, C.J. observed that the non obstante clause is no doubt a very potent clause intended to exclude every consideration arising from other provisions of the same statute or other statute but "for that reason alone we must determine the scope" of that provision strictly. When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself. "A search has, therefore, to be made with a view to determining which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that they erred, no case for imposing penalty was made out." In Employees' State Insurance Corporation. v. HMT Ltd. and Anr, (2008) 3 SCC 35 it was held:- "21. A penal provision should be construed strictly. Only because a provision has been made for levy of penalty, the same by itself would not lead to the conclusion that penalty must be levied in all situations. Such an intention on the part of the legislature is not decipherable from Section 85-B of the Act. When a discretionary jurisdiction has been conferred on a statutory authority to levy penal damages by reason of an enabling provision, the same cannot be construed as imperative. Even otherwise, an endeavour should be made to construe such penal provisions as discretionary, unless the statute is held to be mandatory in character." 8. In Podaran Foods India Pvt. Ltd. (Supra) this Court held:- "5. Tax legislations in our country, especially those dealing with indirect taxes, have always found the need to have provisions for detaining goods and vehicles while in transit to ensure that tax that is legitimately due to the State is not lost through deliberate evasion by unscrupulous assessees. It is therefore that such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanskruthi Motors (supra) where after referring to the judgments in Ranjilal Damodaran (supra); Satyam Shivam Papers (supra); Podaran Foods India Pvt. Ltd. (supra) and the judgment of this Court in Greenlights Power Solutions v. State Tax Officer, Squad No.III, State Goods and Services Tax Department and Ors; MANU/KE/1207/2022 it was held:- "The reason for invoking Section 129 of the CGST laws in this case, is only one - that the e-way bill has expired. A Division Bench of this Court in Renjilal Damodaran's case (supra), no doubt, observed that transport could continue only after e-way bill had been extended in the manner provided for in Rule 138 (10) of the CGST Rules. However, the said finding does not compel me to take a view different from the view taken by the Telangana High Court in Satyam Shivam's case (supra) as the Division Bench has not considered the question as to whether the imposition of a major penalty along with a demand for IGST was justified for the reason that the e-way bill had expired. In the facts of the present case, it is clear from a reading of Ext.P3 that the vehicle ( the goods) was accompanied by an invoice which showed the value of the vehicle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods/conveyance are detained on a finding that the goods are being transported 'in contravention of the provisions of this Act or the rules made thereunder' they shall be released on conditions incorporated in Section 129 (1) (a), (b) or (c). Thereafter the matter has to be adjudicated by issuing a notice and after hearing the parties. If the contention of the State is to be accepted, there is no meaning in any adjudication as contemplated as even if a minor discrepancy were to be eventually noticed, an amount equivalent to 100% of the applicable tax+equal amount as penalty would be payable prior to 1.1.2022 and an amount equivalent to 200% of the tax payable would be payable as penalty after 1.1.2022. This obviously cannot be the intention of the legislature. If such interpretation were to be placed on the provisions of Section 129 of the CGST/SGST Acts the provision would, as already noticed, be arbitrary, whimsical and capricious and would thus be violative of Article 14 of the Constitution of India. 11. The additional contentions raised on behalf of the Revenue by the learned Special Government Pleader (Tax) also do not lead me to conclude that a view different from the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Pvt. Ltd (supra) also does not appeal to this Court as a reading of the judgment in Podaran Foods India Pvt. Ltd (supra) would clearly indicate that the detention of goods while in transit cannot be justified unless there is a possibility of tax evasion. The contention that the petitioner should have approached the Appellate Authority is also not a submission that appeals to this Court as it is settled that the availability of an alternate remedy does not bar the jurisdiction of this Court under Art.226 of the Constitution of India and when the facts of any particular case compels the High Court to exercise discretion and entertain a Writ Petition notwithstanding any alternate remedy, the High Court is duty bound to exercise such discretion. This proposition is too well settled. A Constitution Bench of the Supreme Court in Calcutta Discount Co. Ltd. v. ITO, (1961) 41 ITR 191 faced with a similar argument held:- "27. Mr Sastri mentioned more than once the fact that the Company would have sufficient opportunity to raise this question viz. whether the Income Tax Officer had reason to believe that underassessment had resulted from nondisclosure of material facts, before the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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