Synopsis: The Hon’ble HC, Gujarat in M/s Insha Trading Company v. State of Gujarat held that, if upon verification of the documents and on verification of the goods, no discrepancy is found, the conveyance shall be allowed to move further and thereby, quashed the detention order.
Facts:
M/s Insha Trading Company (“the Petitioner”) is engaged in the business of metal. Ramgarhia Trading Company, which is located in New Delhi, placed an order for brass electrical parts.
The Petitioner dispatched the order from Jamnagar to Delhi. The driver of the truck was carrying an invoice, e-way bill, and lorry receipt while transporting brass electrical parts from Jamnagar to Delhi. The truck was intercepted by the State Tax Officer (“Respondent”) on January 14, 2019. The driver had produced the documents relating to the goods which were transported; however, the Respondent detained the truck on the ground that the genuineness of the goods in transit (its quantity, etc.) and/or tender documents requires further verification. Accordingly, on January 14, 2019, the Respondent issued an order in Form GST MOV-01 recording the statement of the driver as well as an order for physical verification/inspection of the conveyance & goods and the documents in Form GST MOV-02.
Thereafter, by an order dated January 14, 2019, passed under Section 129(1) of the Central Goods and Services Tax Act, 2017 (“CGST Act”) the truck as well as the goods contained therein was ordered to be detained. The ground stated in the order of detention as translated into English reads: “On a perusal of the details in bilty No.15615, it prima facie being disproportionate, the vehicle has been detained for verification of the same”.
Thereafter, by an order dated January 29, 2019, passed in Form GST MOV-09 calling upon the Petitioner to pay the taxes and penalty as computed therein. Thereafter, a notice was e issued in Form GST MOV-10 under Section 130 of the CGST Act for confiscation of the conveyance and goods for verification; and that upon primary examination of the dealer online, it is found that in December 2018, he has generated 42 e-way bills wherein IGST of Rs.3,64,30,800/- is shown, and that it appears that either the dealer has not paid such amount or the purchases are not genuine. Thereafter, by the order (“Impugned Order”) dated April 8, 2019, the goods and conveyance are ordered to be confiscated in the exercise of powers under section 130 of the CGST Act.
Issue involved:
The Petitioner challenged the Impugned Order dated April 8, 2019, passed by the Respondent and taxes and penalty/ fine levied in Form GST MOV- 09.
Held:
The Hon’ble HC Gujarat vide R/Special Civil Application No. 16901 of 2019 dated October 10, 2019, held as under
- The Court noted that nothing was pointed out by the Respondents to show that there was any discrepancy in the e-way bill or the tax invoice.
- As per the instructions issued by the Board in the Circular dated April 13, 2018, since, upon verification of the documents no discrepancies were found, the conveyance should have been allowed to move further.
- Further, the Respondent was required to record, on the common portal, the report and final report of the inspection in Part A and B of Form GST EWB-03 within the specified time.
- However, no such reports in Part A of Form GST EWB-03, Form GST MOV-04 or Part B of Form EWB-03 had been prepared. Thus, the Court concluded that though the vehicle was detained for the purpose of carrying out an inspection, no such inspection was carried out or that upon physical verification, no discrepancy was found in the conveyance/goods or documents.
- Further, In the affidavit-in-reply, there was not even a whisper regarding any discrepancy having been found in bilty No.15615 after verification, even though the conveyance has been detained for that purpose. Thus, it appeared that there was no valid ground for the detention of the vehicle in question on the part of the Respondents. Therefore, the question of calling upon the Petitioner to pay the taxes, penalty and fine, as computed by the Respondent in the order of demand of tax and penalty in Form GST MOV-09 does not arise hence, quashed.
- The Impugned order of confiscation passed by the Respondent under section 130 of the CGST Act cannot be sustained as the reason recorded for passing the Impugned order has nothing to do with the reason for which the goods and conveyance were initially detained and the driver was carrying all the documents.