Case Law Details
Ram Prakash Chauhan Vs Commissioner of Delhi (Goods And Service Tax) & Anr (Delhi High Court)
The Hon’ble Delhi High Court in Ram Prakash Chauhan v. Commissioner of Delhi (Goods and Service Tax) & Anr. [W.P.(C) 6924/2022 dated January 19, 2023] set aside the order raising a demand of tax and penalty for release of the goods. Held that, neither the Show Cause Notice (“SCN”) nor the order of demand stated the reasons for imposing the tax liability as well as penalty. Further, the payment made by the Petitioner for release of the goods was not voluntary. Remanded the matter back and directed the Revenue Department to issue a fresh SCN and pass an appropriate order after affording a reasonable opportunity to the Petitioner to be heard.
Facts:
Ram Prakash Chauhan (“the Petitioner”) carries on the business of trading in steel/iron bars as a sole proprietor. The Petitioner had purchased a consignment of steel (“the goods”) from M/s Mahendra Steels and sold it to M/s S.K. Integrated Consultant (“the Recipient”) and the goods were transported directly to the Recipient through E-way bill dated October 19, 2020, containing all the details of the transport and clearly mentioning the Goods and Services Tax Identification Number (“GSTIN”) of the Petitioner. However, since the goods were sold to the Recipient, therefore, their address was written on the E-way bill.
During transit, the truck was intercepted by the GST Authorities (“the Respondent”) on October 19, 2020 and the truck along with the goods were detained on the grounds that prima facie, the documents were found defective vide Order dated October 23, 2020 (“the Detention Order”) and on the same date, an SCN under Section 129(3) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) was issued and an order of demand in Form GST MOV-09 was passed raising demand of INR 2,78,129 and penalty of equivalent amount (“the Demand Order”).
Subsequently, the Petitioner paid the tax liability and penalty for release of goods and thereafter, filed an appeal before the Appellate Authority challenging the demand of tax and penalty, which was dismissed vide Order dated December 31, 2021 (“the Impugned Order”) on the grounds that the order passed by the proper officer was legally justified and required no interference.
Being aggrieved this petition has been filed by the Petitioner.
Issue:
Whether the Petitioner is liable to pay tax and penalty under Section 129(3) of the CGST Act?
Held:
The Hon’ble Delhi High Court in W.P.(C) 6924/2022 held as under:
- Noted that, the Respondent had not mentioned any specific reason for detaining the goods, raising the demand of tax or for levying penalty, in any of the orders passed as to why the documents accompanying the goods were found to be defective.
- Observed that, the order which formed the basis for penalising the Petitioner, does not disclose the discrepancy or mismatch between the E-Way Bills, quantity of the goods found in the vehicle and the invoices produced.
- Further noted that, there is an error in the E-Way Bill inasmuch as it does not reflect the name of the Petitioner but merely mentions the Petitioner’s GSTIN.
- Stated that, it is unable to accept that the Demand Order and penalty is a consent order and the Petitioner was precluded from challenging the same. Further, the payment made by the Petitioner for release of the goods was not voluntary.
- Opined that, neither the SCN nor the Demand Order clearly sets out the reason for imposing the tax liability as well as penalty.
- Held that, it would be apparent to remand the matter to the Respondent to decide afresh after giving the Petitioner full opportunity to address the allegation against him.
- Set aside the Impugned Order and the Demand Order.
- Directed the Respondent to issue a fresh SCN within 2 weeks and pass an appropriate order after affording a reasonable opportunity to the Petitioner to be heard.
Relevant Provisions:
Section 129 of the CGST Act:
“Detention, seizure and release of goods and conveyances in transit
(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 penalty equal to two 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 penalty;
(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, 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 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.
(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).
(4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.
(6) Where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):
Provided that the conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less:
Provided further that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.”
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition impugning an order dated 23.10.2020, whereby the petitioner’s goods were detained under Section 129(1) of the Goods & Services Tax Act, 2017 (hereafter ‘the Act’) as well as an order dated 23.10.2020 raising a demand of tax and penalty of a sum of ₹2,78,129/-.
2. The petitioner had appealed the said orders. However, the said appeal was dismissed by the Appellate Authority in terms of an order dated 31.12.2021. The petitioner also impugns the said appellate order.
3. The petitioner states that it carries on the business of trading in steel/iron bars as a sole proprietor of a concern named Shri Ram Enterprises.
4. The controversy, in the present case, relates to detention of a consignment of goods intercepted during their transportation. The petitioner states that it had purchased the said consignment of steel from M/s Mahendra Steels (GSTIN 07ABBFM3857D1ZE) and had sold it to M/s S.K. Integrated Consultants (GSTIN 07AAQFSS059PIZ8). The said goods were in the process of being transported directly from the premises of M/s Mahendra Steels to M/s S.K. Integrated Consultants.
5. The petitioner claims that an E-Way Bill (E-Way Bill No. 731151893114) dated 19.10.2020 was generated for transporting the said goods. The said E-Way Bill duly recorded the movement of goods in question, in a truck bearing Registration No. HR 46D 1337 from M/s Mahendra Steels (Khasra No. 59/8 Tel Wali Gali, Mundka, Delhi) to Dwarka More Near Dwarka Metro Station, Dwarka, New Delhi – 110077, which are the premises of S.K. Integrated Consultants.
6. The petitioner states that the E-Way Bill clearly mentions the GSTIN number of the petitioner being GSTIN 09AJJPC9819MIZL. However, since the petitioner had sold the goods in question to M/s S.K. Integrated Consultants, therefore, the address provided in the E-Way Bill was that of M/s S.K. Integrated Consultants.
7. The truck was intercepted by the GST Authorities on 19.10.2020 at 11:00 p.m. The said truck was detained on the ground that the documents found were defective. However, there is some controversy in this regard as the respondent claims in the counter-affidavit that the goods were not accompanied by any E-Way Bill but merely an invoice in the name of M/s S.K. Integrated Consultants.
8. The petitioner’s goods were detained by a detention order dated 23.10.2020 and on the same date, notice under Section 129(3) of the GST Act was issued. The said notice stated the reasons for detaining the goods as “prima facie, the documents tendered are found to be defective”.
9. On the same date (that is, 23.10.2020), an order of demand of tax and penalty was passed raising a demand of ₹2,78,129/- and a penalty of an equivalent amount.
10. The petitioner states that he required the goods urgently and therefore, paid the tax and penalty demanded for securing the release of goods.
11. Thereafter, the petitioner preferred an appeal before the Appellate Authority impugning the said demand of tax and the levy of penalty. The said appeal was dismissed by the Appellate Authority by an order dated 31.12.2021.
12. The Appellate Authority found that the order dated 23.10.2020, passed by the proper officer, was legally justified and required no interference. The reasons for the said conclusion are set out in Paragraph 11 of the order passed by the Appellate Authority, which reads as as under:
“11.I have heard the submissions of the representatives of the Appellant and also gone through the impugned order issued in GST MOV-09 by the Proper Officer dated 23.10.2020 along with all the other documents placed on record. After having carefully perused the impugned order as well as written submissions and the grounds raised by the Appellant in the instant appeal, it is found that the Proper Officer has issued the detailed/speaking order after complying the provisions as envisaged under the DGST Act and rules made therein under. The Proper Officer has categorically pointed the discrepancy in form of Mis-Match between the E-Way Bill and goods in Movement in the order which formed the basis for penalizing the Appellant and passed the impugned order accordingly. Even otherwise, it is also worthwhile to mention that the Appellant himself has admitted the liability fastened upon him by paying the demand towards tax, interest and penalty to the government and in view of the same, it appears that the Proper officer was legally justified in raising the impugned demands towards tax and penalty in MOV-09. Thus, the contentions raised by the Counsel for the Appellant have no merits and hence rejected accordingly.”
13. Ms Sinha, the learned counsel for the petitioner, submits that the concerned GST Authorities had not mentioned any specific reason for detaining the goods, raising the demand of tax or for levying penalty, in any of the orders passed by the said Authorities.
14. The notice dated 23.10.2020 merely indicates that the documents tendered are found to be defective; it does not mention any specific defect found by the concerned GST Authorities.
15. The order of tax and demand, which is also dated 23.10.2020, does not specify any reason why the documents accompanying the goods were found to be defective.
16. Further, as is apparent from Paragraph 11 of the order passed by the Appellate Authority, the order which formed the basis for penalising the appellant too does not disclose the discrepancy or mismatch between the E-Way Bills and the goods.
17. Admittedly, there has been no mismatch in the quantity of the goods found in the vehicle and the invoice produced. However, according to the respondents, the goods were not accompanied by an E-Way Bill. Although this is stated in the counter-affidavit, the said fact does not find mention in the order of demand dated 23.10.2020 or the order dated 31.12.2021, passed by the Appellate Authority.
18. The learned counsel for the petitioner also submits that there is an error in the E-Way Bill inasmuch as it does not reflect the name of the consignee but merely mentions the petitioner’s GSTIN number. She submits that the E-Way Bill is required to be read with the two invoices – one invoice raised by M/s Mahendra Steels addressed to the petitioner and the second raised by the petitioner in the name of S.K. Integrated Consultants. She contends that if these documents are viewed in conjunction with one another, it would be clear that any error in the documents is only a minor error and the petitioner cannot be penalised by imposition of tax on the goods as well as penalty of an equivalent amount.
19. Mr. Satyakam , learned counsel for the respondent, states that the order dated 23.10.2020, raising a demand of tax and penalty, is a consent order and therefore, the concerned GST Officer was not required to give detailed reasons. Ms. Sinha disputes the contention that the order dated 23.10.2010 was a consent order. She submits that the petitioner had no option but to pay the amount of tax and penalty as the goods had been detained and the petitioner required their release.
20. We are unable to accept that the order of demand and penalty is a consent order and the petitioner was precluded from challenging the same. The goods had been detained and it is not disputed that the same would not have been released unless the tax and penalty was paid. We are persuaded to accept that the petitioner had paid the tax and penalty for release of the goods and the said payment was not voluntary.
21. As stated above, it is apparent that neither the show cause notice nor the order of demand clearly sets out the reason for imposing the tax liability as well as penalty.
22. In the given facts, we are of the view that it would be apposite to remand the matter to the concerned GST officer to decide afresh after giving the petitioner full opportunity to address the allegation against him.
23. In view of the above, the order dated 23.10.2020, raising a demand of tax and penalty, is set aside. The order dated 31.12.2021 passed by the Appellate Authority is also set aside. The matter is restored to the file of the concerned GST Officer. He shall issue a fresh show cause notice within a period of two weeks from today and pass an appropriate order after affording a reasonable opportunity to the petitioner to be heard.
24. The petition is disposed of in the aforesaid terms.
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