HC Upholds GST Penalty for Goods Transported Without Proper Invoice & Documents

Kumutham Agencies Vs State Tax Officer-II (Madras High Court) 

In a crucial judgement, the Madras High Court upheld a penalty on goods transmitted without proper invoices and transport documents. The ruling was in response to a challenge by Kumutham Agencies against the proceedings by the State Tax Officer-II.

The case came into the spotlight when a vehicle owned by the petitioner, Kumutham Agencies, was intercepted by officials for carrying diesel without necessary invoices and transport documents. The petitioner contended that the route was changed due to ongoing road repairs, a reason that was dismissed by the court. The court asserted the necessity for proper documentation for goods transportation, thereby imposing a penalty equivalent to twice the duty amount on the petitioner. The court, however, provisionally released the vehicle, contingent on the payment of the disputed tax and an additional security penalty.

This case reaffirms the court’s stance on ensuring stringent compliance with the law when transporting goods. The verdict underscores the importance of following the correct legal procedures and the consequences of their absence. The ruling serves as a crucial reference for businesses and individuals engaged in goods transportation, highlighting the necessity of proper documentation to avoid legal complications.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

The petitioner has challenged the impugned proceedings of the 1st respondent dated 12.07.2023 bearing G.D.No.2905/2023-24, to quash the same and direct the 2^nd respondent to release the detention goods as illegal and contrary to the provisions of the Tamil Nadu Value Added Tax Act, 2006.

2. The fact on record indicate that the vehicle bearing Registration No.TN 31 CD 0115 was intercepted by the officers of the 2^nd respondent and statement from the Driver of the lorry was recorded. The statement recorded from the Driver of the lorry reads as under:

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3. The specific case of the petitioner is that the aforesaid vehicle was carrying diesel, which is highly inflammable. Since the road between Cuddalore and Seerkazhi are under repair, the Driver took a different route and when the Driver was taking food, the Roving Squad came and seized the vehicle.

4.The learned counsel for the petitioner would submit that the explanation offered by the petitioner has not been accepted, as the vehicle had taken a different route to avoid jerk to reduce the risk of the vehicle catching fire while in transit.

5.The learned Government Advocate for the respondents on the other hand would submit that the impugned order detaining the goods and imposing penalty twice the amount of duty was well reasoned and does not require any interference. That apart, it is submitted that the petitioner has alternate remedy before the Commissioner and therefore,

6. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Government Advocate appearing for the respondents.

7. Although the learned counsel for the petitioner would submit that the petitioner is willing to pay the duty. As far as the penalty is concerned, the learned counsel for the petitioner would submit that the petitioner may be relegated to work out the remedy before the Appellate Commissioner. Fact remains that the movement of diesel was not covered with proper invoice and transport document. In any event, the petitioner was liable to pay the tax under Tamil Nadu Value Added Tax Act, 2006, on the goods. Thus, there is really no concession in the offer made by the learned counsel for the petitioner.

8. At the same time, considering the fact that the product in the vehicle is diesel which is prone to inflammable, Court is inclined to order provisional release of the vehicle, subject to the petitioner paying the disputed tax that has been arrived in the impugned order and a further sum of Rs.1,00,000/- (Rupees One Lakh Only) towards security penalty imposed within a period of seven days from the date of receipt of a copy of this order.

9. The amounts to be paid by the petitioner pursuant to this order can be appropriated finally subject to final outcome of the proposed appeal to be filed by the petitioner. The petitioner shall also execute a bond to the satisfaction of the 2^nd respondent within such period. Subject to the compliance of the conditions stipulated above, the above vehicle of the petitioner shall be provisionally released.

10. Accordingly, the Writ Petition stands disposed of with the above observations. No costs.