Synopsis: In the matter of India Logistics and Cargo Movers v. The State of Gujarat, the Hon’ble HC, Gujarat quashed the order issued by the Revenue authorities without application of mind and recording of reasons thereof. Further, directed the Respondents to release goods along with conveyance.
M/s India Logistics and Cargo Movers (“the Petitioner”) is engaged in the business of transport, procured about 61 different customers. On May 16, 2019, while, the goods were in transit, State Tax Officer (“the Respondent”) intercepted the vehicle and found that the e-way bills of three parties were not generated. The statement of the driver in charge of the vehicle came to be recorded in Form GST MOV-1. The goods in respect of 58 customers wherein there were valid e-way bills came to be released; however, the vehicle with the goods in respect of the above three parties came to be detained on the spot on May 16, 2019 by issuing a notice in Form GST MOV -10 under Section 130 of the CGST Act, 2017 (“CGST Act”)/ GGST Act, 2017 (“GGST Act”).
The Petitioner provided justification for not generating the above-mentioned e-way bills; however, there was no response from the Respondents. The Petitioner agreed to pay the tax and penalty as calculated on the basis of transaction value in the invoice as envisaged under Section 129 of the CGST Act/ GGST Act. However, the Respondent passed an order dated May 28, 2019 increasing the value of goods by 20% and confiscating the goods under Section 130 of the CGST Act/ GGST Act.
Whether the order passed by the Respondent is valid in the eyes of law?
The Hon’ble High Court Gujarat in R/Special Civil Application No. 15178 of 2019 decided on September 24, 2019 held as under:
- The court observed that because 14 invoices are not properly signed, the authorities have exercised powers under Section 130 of the CGST Act/ GGST Act and calculated tax, penalty and fine thereunder. If that be so, since none of the 14 invoices relate to the parties whose goods are confiscated, under the circumstances, the goods belonging to them could not have been confiscated by the Respondents.
- It is an admitted position that in this case no detention order under Section 129 of the CGST Act/GGST Act has been made and the Respondents have directly resorted to the provisions of confiscation under Section 130 of the said CGST Act/ GGST Act.
- On reading the order of confiscation in its entirety, it is manifest that the Respondent has not assigned any reason whatsoever as to why the goods and conveyance were required to be confiscated. Despite the fact that the Petitioner and Anjani Synthetics Limited had submitted explanations in respect of the discrepancies noticed by the Respondent, there is no reference to the same in the impugned order. Thus, the Respondent without applying his mind to the facts of the case appears to have mechanically passed the impugned order without assigning any reasons worth the name for confiscating the goods and conveyance.
- Despite the fact that out of 61 consignments, the Respondent has noticed deficiencies only in respect of three consignments, the conveyance of the Petitioner is also sought to be confiscated, that too without assigning any reasons as to how the Petitioner has sought to evade payment of tax. It was incumbent upon the Respondent to give reasons in support of his conclusion that the goods in question and the conveyance are required to be confiscated. However, the order is totally bereft of any reasons, in the absence of which the order stands vitiated due to non-application of mind on the part of the maker of the order. The impugned order dated May 28, 2019, therefore, cannot be sustained.