F S Enterprise (“FS” or “the Petitioner”) is registered under the relevant Goods and Services Tax Acts (“the GST Acts”) & has filed a special civil application in the Gujarat High Court.
The Petitioner received an order from M/s. Riya Enterprise, who is a registered person in the State of Maharashtra under the GST Acts for the supply of TMT bars and angles. Pursuant to such order, the Petitioner was transporting the goods and the driver of the truck duly had with him the tax invoice as well as the transport receipt in respect of such goods. Before the commencement of the movement of goods, the Petitioner had duly generated the e-way bill in respect of the transaction on the online GST portal. The details of the invoice, as well as details of the buyer, were duly entered in the online e-way bill. The truck along with the goods came to be detained on the highway by the second Respondents, viz., the State Tax Officer, Mobile Squad, Sagbara. The driver of the truck duly produced all documents relating to the goods including invoice, transport receipt and e-way bill. However, despite the fact that the Petitioner had complied with the procedure for movement of goods as stipulated under the GST Acts, by the impugned order, the truck with the goods came to be detained/seized under section 129 of the Central Goods and Service Tax Act, 2017 (“CGST Act, 2017”) & the GST Acts on the ground that the transport receipt was a photocopy and the details filled in the transport receipt were handwritten.
Subsequently, the Respondents issued a notice demanding payment of tax and penalty under section 129 of the GST Acts for release of the goods. A copy of the statement of the driver in the prescribed format GST MOV 1 was also provided to the Petitioner. The Petitioner, thereafter, immediately approached the concerned authority and submitted all the documents which are required to accompany the goods under the GST Acts. The e-way bill was admittedly generated prior to the commencement of the movement of goods which contained all details relating to the invoice as well as the buyer of the goods. Insofar as the transport receipt is concerned, the Petitioner explained that it was a common practice of the transporter to send scanned copies of the transport receipt through WhatsApp/email which were then filled at the place of dispatch and signed by the authorized representative of the transporter. However, no format was prescribed for transport receipt under the GST Acts and thus, there was no question of there being any breach of the provisions of the GST Acts. Despite such written statements and repeated oral requests, the second Respondent refused to release the truck with the goods without payment of tax and penalty under section 129 of the GST Acts. Being aggrieved, the Petitioner has approached this Court challenging the order of detention dated April 2nd, 2019 passed by the second Respondents under section 129 of the CGST Act, 2017 and the provisions of other relevant statutes as well as the notice dated April 2nd, 2019 issued in FORM GST MOV-07, demanding tax and penalty under section 129.
By an order dated April 12th, 2019, this Court, by way of interim relief, had directed the Respondents to forthwith release truck No. GJ-04-AT-9302 along with the goods contained therein.
Reference was made to Circular No.64/38/2018-GST dated September 14th, 2018, issued by the Central Board of Indirect Taxes and Customs(“CBIC”), GST Policy Wing, to point out that in para 5 thereof, it has been provided that in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:-
“a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
- b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
- c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
- d) Error in one or two digits of the document number mentioned in the e-way bill;
- e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
- f) Error in one or two digits/characters of the vehicle number.”
It was pointed out that para 6 thereof, provides that in the case of the above situations, penalty to the tune of Rs. 500/- each, under section 125 of the CGST Act, 2017 and the respective State GST Act should be imposed (Rs.1000/- under the Integrated Goods and Services Tax Act, 2017) in FORM GST DRC-07 for every consignment.
Next, it was submitted that while the conveyance with the goods was detained on the above-ground alone, in the affidavit in reply filed on behalf of the Respondents, new grounds have been raised, namely, that the Petitioner had not obtained GST registration for the commodities which were being transported and that the driver of one of the vehicles had given a statement that the goods were being transported from Sihor to Aurangabad. It was emphatically argued that the addition of reasons by way of an affidavit is not tenable. In support of such submission, the learned advocate placed reliance upon the decision of the Supreme Court in the Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi, AIR 1978 SC 851, for the proposition that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out.
It was submitted that insofar as the inclusion of the goods in the registration certificate under the GST Acts is concerned, a person is registered as a supplier under the GST Acts, there is no concept of goods-wise registration. In fact, even in the FORM GST REG-01, which is the form for application of registration, only the top five commodities need to be specified. Thus, it is only in the nature of general information which has to be provided and that there is no provision that makes a transaction of a commodity not specified in the application for registration to be invalid or illegal. It was submitted that in fact there can be no such provision since all commodities are not even required to be mentioned in the application for registration.
It was further submitted that in the present case while due to oversight, the commodities being transported were not mentioned in the application for registration, as a matter of fact, a clear description of the commodities along with HSN Code was given in the invoice as well as the e-way bill and the correct rate of tax was also applied. The e-way bill was generated on the online portal before the commencement of the movement of goods wherein the description of goods as stated was admittedly in order. It was submitted that this was nothing but an online intimation of the description of goods intended to be supplied by the Petitioner and thus there was no question of any intention of concealing any fact from the department. It was submitted that at best it could be said to be a technical error on the part of the Petitioner in filling the application for registration and upon such error being pointed out, the Petitioner immediately filed an application for amendment of the registration certificate. It was contended that on such a basis, it cannot be said that the goods were being transported in contravention of the provisions of the GST Acts.
The Complete Judgement can be accessed at: http://www.a2ztaxcorp.com/wp-content/uploads/2019/11/Gujarat-HC-provides-significant-relief-against-unjust-order-on-detention-of-truck.pdf