The Allahabad High Court has held that GST penalty provision cannot be invoked if the consignor with tax invoice & e-way bill is an owner.
The bench of Justice Piyush Agrawal when consignor with the tax invoice and e-way bill claimed himself to be the owner of the goods, the provisions of Section 129 (1) (b) of the GST Act could not be invoked.
Background
The petitioner/assessee is a registered dealer in MS scrape based at Delhi and makes sales of the MS scrape to Steel Rolling Mills based in northern India.
In the normal course of business, the petitioner sold MS scrape to M/s Himgiri Ispat Pvt. Ltd. The goods were accompanied with proper documents i.e. tax invoice, E-way Bill of the consignor dealer M/s Samira Enterprises Delhi.
The goods were issued by M/s Supreme Roadlines, Ghaziabad 201001, UP. The goods, during its onward journey, were intercepted at Muzaffarnagar, UP by the respondent-department and GST MOV- 1 and 2 was issued and the goods were detained.
The petitioner submitted a reply in which it was clearly stated that there is no contravention of the provisions of GST Act and the goods may be released but GST MOV -4, MOV-6 and MOV-7 was issued quantifying the tax and penalty and also detained the goods in question.
The petitioner submitted that a detailed reply was submitted by the petitioner however being not satisfied with the same the order was passed imposing tax as well as penalty upon the petitioner.
The petitioner filed an appeal which was also dismissed by the order without considering the matter in proper perspective.
Arguments
The petitioner contended that the proper documents were accompanying the goods. The goods were purchased through Tax invoice and E-way Bill. The E-way Bill was prepared of which due entries were made in the books of account of the petitioner.
The petitioner argued that in view of clause 6 of the notification no. 76/50/2018 -GST dated 31.12.2018, if the invoice or any other specific document is accompanying the consignment then the consignee should be deemed to be the owner of the goods in question. The petitioner had appeared before the respondent-department but still the order has been passed.
The petitioner contended that Circular no. 64/38/2018-GST dated 14.9.2018 contemplates that the goods can be detained only if tax invoice or any other specified document and the E- way Bill is not accompanying the goods then the proceedings under Section 129 may be initiated. However, all the required documents, as prescribed under the Act as well as the Rules framed thereunder, are accompanied with the goods in question, still the proceedings have illegally been initiated.
The department contended that proceedings had been initiated against the petitioner. Once the E-way bill has been issued which shows that goods had moved from the originating place i.e. from Ghaziabad to Delhi then it shows that the goods were moving from Delhi to Uttarakhand but it was averred that the goods has been loaded from Ghaziabad for its onward journey to Uttarakhand which shows that in the event the goods were not intercepted, the petitioner would have been succeeded to avoid the payment of legitimate tax. Therefore, the proceedings have rightly been initiated.
Conclusion
The court found that the goods were accompanying with the documents i.e. Tax invoice, GR and E- way Bills. In the E-way bill, the dispatch place is specifically mentioned as Ghaziabad UP. The records shows that after detention of the goods, a reply was submitted by the petitioner it was specifically mentioned that purchase was made from a Ghaziabad dealer and therefore due entries had been made in its purchase account. Merely because that the E-way bill was issued by the Ghaziabad dealer on the purchase made by the petitioner, this will not make that the goods was purchased from a non bonafide dealer.
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The court held that the department has failed to bring on record any material to show that the goods were purchased from a non bonafied dealer. The movement of the goods in question is shown by the petitioner of which tax invoice and E-way bill was issued in which in the place of dispatch, it was specifically mentioned as Ghaziabad. The GR has also been issued. The record revealed that no discrepancy whatsoever with regard to quality, quantity or specification i.e. MS scrap was found otherwise.
The court while allowing the petition held that the department is directed to refund any amount deposited by the petitioner either pursuant to the impugned orders or in pursuance of the direction made by this Court, within a period of one month.
Case Title: M/S Samira Enterprises Versus State
Case No.: Writ Tax No. – 1420 Of 2022
Date: 11.9.2024
Counsel For Petitioner: Harsh Chachra
Counsel For Respondent: C.S.C. Ravi Shanker Pandey
