Case Law Details
Jaitron Communication Pvt. Ltd. Vs State Of U. P. (Allahabad High Court)
Admittedly, in the facts of the present case the petitioner did accept that the e-way bill with the vehicle did not contain correct description with regard to movement of goods. Another e-way bill (though not available with the vehicle, at the time of detention) has also been produced along with details of job work executed in favour of the petitioner. The tax invoice which has been relied upon for determining the liability of tax admittedly is of the year 2018 and it is not the case of the Department that such amount of tax was not paid at the time when the machine was purchased in the year 2018 itself. It is also not the case of the Department that this machine has been sold to anybody. The specific case of the petitioner before the proper Officer was that this machine was being transported for performance of job work and not for any other work.
Perusal of the orders passed would clearly go to show that the claim set up by the assessee with regard to transportation of machine for performance of job work has not been examined on merits. There is also no consideration or finding in the orders passed by the authority which may suggest that this transportation of machine was for any other purpose. The proper Officer in terms of the scheme was expected to examine the specific defence set up by the petitioner and consequently determine the liability of tax payable by the petitioner. It is only after determining the liability to pay tax that the liability to pay penalty could be determined. This exercise does not appear to have been performed by the proper Officer in the manner expected by it in accordance with the Act. Petitioner’s claim that no liability to pay tax had arisen till the time when the machine was being transported is also required to be examined. Such factual issues require proper determination at the level of the proper Officer, at the first instance. Since the exercise in that regard is not found to be in accordance with law the orders impugned dated 28.1.2020 and 6.2.2020 cannot be sustained and are accordingly quashed. Petitioner shall appear before the proper Officer on 5.10.2020 and shall furnish all such details as are available with it to substantiate its plea already been taken in its reply on 14.1.2020. The proper Officer is requested to examine such defence of the petitioner and thereafter determine the liability, if any, in accordance with law. It is made clear that this Court has not determined the liability of the petitioner on merits and all issues of fact are left open to be examined by the proper Officer, at the first instance. Such exercise be undertaken expeditiously by the proper Officer, preferably within a period of four weeks. Depending upon the outcome of such proceedings, it shall be open for the authorities to proceed further in accordance with law.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
This petition has been filed under Article 226 of the Constitution of India directly against the order passed by the Proper Authority and first appellate authority, while exercising jurisdiction under Section 129 of the Central Goods and Services Tax Act, 2017, since the G.S.T. Tribunal has not been constituted so far by the Central Government for the State of Uttar Pradesh. It is urged that statutory right of the petitioner to approach the Tribunal cannot be taken away once the Act itself has been enforced. Attention of the Court has been invited to Section 112(3) and 113(1) of the Act which defines the jurisdiction of the C.G.S.T. Tribunal. Section 112(3) and Section 113(1) of the Act is reproduced hereinafter:-
”112(3) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or Commissioner of Union territory tax, call for and examine the record of any order passed by the Appellate Authority or the Revisional Authority under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act for the purpose of satisfying himself as to the legality or propriety of the said order and may, by order, direct any officer subordinate to him to apply to the Appellate Tribunal within six months from the date on which the said order has been passed for determination of such points arising out of the said order as may be specified by the Commissioner in his order.
113(1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the Appellate Authority, or the Revisional Authority or to the original adjudicating authority, with such directions as it may think fit, for a fresh adjudication or decision after taking additional evidence, if necessary.”
Learned counsel for the petitioner with reference to the above provision contends that the appeal before the Tribunal is not confined to question of law alone, but even factual issues are also open for examination before the Tribunal. Had such an opportunity be given, the petitioner could have addressed the Tribunal on factual issues also. It is, therefore, submitted that while exercising jurisdiction under Article 226 of the Constitution of India this Court may keep in view the above provisions so as to protect the rights of the petitioner with regard to statutory remedy available before the Tribunal, at the first instance.
A perusal of record would go to show that transport Vehicle No. U.P. 70 A.T. 5360 was detained by the C.G.S.T. authorities on 9.1.2020 at 6:20 A.M. on Yamuna Expressway while it was transporting a drilling machine. The driver of the vehicle produced an E-way bill electronically as per which the machine was being transported from SD Technologies Kisan Vihar, Ghansoli, Maharashtra to Sector 3, Block 10 Rajendra Nagar, Ghaziabad. The value of the machine along with tax was shown as Rs.41,30,000/-. No tax invoice, chalan, hard copy etc. was found with the vehicle. Finding it to be a violation of Rule 138 of the G.S.T. Rules the vehicle was detained and a notice was issued to the petitioner under Section 129(3) of the Act.
In reply to the notice issued under Section 129(3) of the Act, the petitioner stated that the E-way bill available with the driver was mistakenly generated inasmuch as it related to purchase of drilling machine in 2018 itself, and that the correct E-way bill No.441103629039 has also been generated as per which the equipment was being sent to M/s Sharda Equipment, Jharkhand pursuant to a job work awarded to the petitioner for drilling bore wells. Along with the supplementary affidavit, filed today, the petitioner has also send a letter dated 14.1.2020 to the proper officer as per which the machine was being sent for performance of job work and that there existed no other motive for sending driling machine.
The Assessing Authority has considered the reply of the petitioner and has found that in the e-way bill available with the driver at the time of detention the machine was shown to be in transit from Maharashtra to Ghaziabad, with the value of the commodity with tax disclosed at Rs.41,30,000/-. The authority has observed that admitted tax of Rs. 6,30,000/- since has not been paid as such this amount together with 100% penalty is liable to be paid by the petitioner. This order has then been affirmed in appeal. Aggrieved by these two orders the petitioner is before this Court.
Learned counsel for the petitioner with reference to the pleadings made in the writ petition submits that the machine in transit is actually a horizontal direction drilling machine which was to be utilised by the assessee for performance of job cotranct given by M/s Sharda Equipment, Jharkhand. It is submitted that this machine was purchased in the year 2018 from Maharashtra and the amount of GST payable for such purchase has already been paid in the year 2018 itself. It is submitted that while passing order under Section 129(3) of the Act the Assessing Authority is expected to determine the amount of tax and penalty payable and release the seized goods upon deposit of such amount. Submission is that the Assessing Authority and the first Appellate Authority have failed to examine petitioner’s claim on merits with regard to execution of job work and the consequential liability to pay tax and penalty. It is also urged that job work since is yet to be performed and no payment is made, therefore, no amount is actually payable towards tax.
Per contra, learned Standing Counsel submits that the authorities have correctly assessed the liability of tax and penalty on the basis of admitted materials and, there is no illegality in the order itself.
I have heard Sri Nishant Mishra, learned counsel for the petitioner and Sri B. K. Pandey, learned Standing counsel and have examined the materials on record.
Section 129 provides for detention, seizure and release of goods and conveyance in transit. In the event it is found that transportation of goods is in contravention of the provisions of the C.G.S.T. Act or Rules made there under then the competent authority is empowered to detain and thereafter seize goods and vehicle. It is only upon payment of applicable tax and penalty specified under Section 129(1) that such goods can be released. Section 129(1) and sub-Section 3 of Section 129 is reproduced hereinafter:-
“129 (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released, ––
(a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
129(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).”
Release of seized goods and vehicle can only be upon payment of application tax and penalty as per the rates specified under Section 129(‘a’, ‘b’ or ‘c’). For the purposes of specifying tax and penalty payable in terms of above provisions the proper officer is expected to issue a notice specifying the tax and penalty payable and thereafter pass an order for payment of tax and penalty. It is therefore expected that the proper officer will give an opportunity and thereafter examine the defence set up by the assessee, in response to the notice issued under sub-Section 3, and determine the amount payable towards tax and penalty.
In the facts and circumstances of the present case the petitioner has urged that e-way bill available with the vehicle t the time of detention did not contain the correct description of the transaction for which the machine itself was being transported. As per the assessee the movement of machine was for performance of contract to supply services and, therefore, by virtue of Section 7, 9 and 13 read with 31 of the Act the nature of transaction as also the liability to pay tax has to be determined. According to petitioner in terms of the above provisions no liability to pay tax has yet arisen as the contract of service is yet to be performed and no payment for services has yet been received. It is submitted that the authorities have not correctly examined facts in light of the claim set up by it and, therefore, the orders passed are unstained.
Admittedly, in the facts of the present case the petitioner did accept that the e-way bill with the vehicle did not contain correct description with regard to movement of goods. Another e-way bill (though not available with the vehicle, at the time of detention) has also been produced along with details of job work executed in favour of the petitioner. The tax invoice which has been relied upon for determining the liability of tax admittedly is of the year 2018 and it is not the case of the Department that such amount of tax was not paid at the time when the machine was purchased in the year 2018 itself. It is also not the case of the Department that this machine has been sold to anybody. The specific case of the petitioner before the proper Officer was that this machine was being transported for performance of job work and not for any other work.
Perusal of the orders passed would clearly go to show that the claim set up by the assessee with regard to transportation of machine for performance of job work has not been examined on merits. There is also no consideration or finding in the orders passed by the authority which may suggest that this transportation of machine was for any other purpose. The proper Officer in terms of the scheme was expected to examine the specific defence set up by the petitioner and consequently determine the liability of tax payable by the petitioner. It is only after determining the liability to pay tax that the liability to pay penalty could be determined. This exercise does not appear to have been performed by the proper Officer in the manner expected by it in accordance with the Act. Petitioner’s claim that no liability to pay tax had arisen till the time when the machine was being transported is also required to be examined. Such factual issues require proper determination at the level of the proper Officer, at the first instance. Since the exercise in that regard is not found to be in accordance with law the orders impugned dated 28.1.2020 and 6.2.2020 cannot be sustained and are accordingly quashed. Petitioner shall appear before the proper Officer on 5.10.2020 and shall furnish all such details as are available with it to substantiate its plea already been taken in its reply on 14.1.2020. The proper Officer is requested to examine such defence of the petitioner and thereafter determine the liability, if any, in accordance with law. It is made clear that this Court has not determined the liability of the petitioner on merits and all issues of fact are left open to be examined by the proper Officer, at the first instance. Such exercise be undertaken expeditiously by the proper Officer, preferably within a period of four weeks. Depending upon the outcome of such proceedings, it shall be open for the authorities to proceed further in accordance with law.
