2 Documents furnished at physical verification stage- Confiscation of goods without proper enquiry not valid 

Case Law Details

Case Name : A.S. Enterprise Vs Commissioner of State Tax U.P. (Allahabad High court)
Appeal Number : Writ Tax No. 1126 of 2021
Date of Judgement/Order : 01/04/2022
Related Assessment Year :

A.S. Enterprise Vs Commissioner of State Tax U.P. (Allahabad High court)

The petitioner’s case was that the petitioner could not produce relevant documents at the time of inspection of goods in transit. The same (all documents) were produced at the time of physical verification. The authority declined to verify the same. The detaining authority formed a view that further documents may be produced only along with show cause notice. The petitioner produced the entire set of documents being original invoices to establish that the goods in question were covered by regular tax invoice with respect to transaction on inter-state sale on which IGST had been paid.

Treating the above explanation to be an afterthought and solely on account of absence of such documents at the stage of interception of the goods and physical verification, it has been assumed, the goods were being imported into the State of U.P. in contravention of law. Accordingly, tax and penalty had been demanded and confiscation made.

There is no dispute to the fact that the documents that were produced by the petitioner though at the stage of the show cause notice were original tax invoices issued by the petitioner. No enquiry was made to doubt the genuineness of such tax invoices or to doubt the date of issue of such invoices. Thus, all tax invoices produced by the petitioner to cover the disputed goods are dated 31.07.2021. No enquiry appears to have been made from the revenue authorities in the State of Punjab to confirm if the transactions were genuine. Then, it is not the case of the revenue that the goods found transported were different from the goods disclosed in the tax invoices produced by the petitioner. No enquiry was conducted by the respondent authorities either from the purchasing dealers or the Assessing Authority to doubt the transaction at the end of the consignee.

In view of the above lack of enquiry and lack of reasonable doubt, the continued seizure and confiscation as also the demand of tax and penalty is based solely on presumptions and conjectures.

In absence of proper enquiry and lack of reasonable doubt

seizure and confiscation of goods without proper enquiry

Consequently, though the detention did not suffer from any illegality, however, the further orders of the seizure etc. are found to be not based on any material or evidence on record. Accordingly, the impugned orders dated 7.10.2021 and 6.9.2021 are set aside. The goods as also vehicle may be released forthwith.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Heard Shri Aloke Kumar, learned counsel for the petitioner and learned Standing

2. Present petition has been filed against the order dated 7. 10.2021 passed by the First Appeal Authority whereby that authority has confirmed the order dated 9.2021 passed by respondent no.2/Assistant Commissioner (Mobile Squad) Unit 10 Commercial Tax, Agra, under Integrated Goods and Services Tax Act 2017 (hereinafter referred to as the IGST Act) read with Section 20 of the Central Goods and Services Tax Act 2017 (hereinafter referred to as the CGST Act) and Section 129(3) of the Uttar Pradesh Goods and Services Tax Act 2017 (hereinafter referred to as the UP GST Act).

3. Having heard learned counsel for the parties and having perused the record, it transpires, the petitioner claims to be the owner of the goods. It further claims to have sold the goods from Ludhiana in the State of Punjab to three dealers at Gwalior – Navkar Fashions, Afzal Alam Khan and Jayendra Singh Jadon. The value of the goods sold to each of the dealers was below Rs. 50,000/- i.e. below the threshold limit prescribed for issuance of E-way bills.

4. While the goods were in transit from Ludhiana in the State of Punjab to Gwalior through the State of Uttar Pradesh on truck bearing registration no. MP-07-MK­5454, the same was stopped for checking by Mobile Squad Authority in the State of P. on 01.08.2021. At that time, the petitioner produced the documents accompanying the goods. While no dispute was raised with respect to part of the consignment which was found covered by the documents thus produced, the respondent / detaining authority was not satisfied with respect to remaining part of the consignment found not covered with any invoice or other document. In that regard, the petitioner claims, owing to inadvertence of the driver of the truck, the entire documents remained from being produced at the time of the physical verification carried out on 01.08.2021. However, immediately thereafter, the driver of the truck realized his mistake and produced the remaining documents before the detaining authority. That request was declined. The detaining authority formed a view that further documents may be produced only along with show cause notice. Accordingly, the show cause notice was issued on 04.08.2021. In response thereto, the petitioner produced the entire set of documents being original invoices to establish that the goods in question were covered by regular tax invoice with respect to transaction on inter-state sale on which IGST had been paid.

5. Treating the above explanation to be an afterthought and solely on account of absence of such documents at the stage of interception of the goods and physical verification, it has been assumed, the goods were being imported into the State of P. in contravention of law. Accordingly, tax and penalty had been demanded and confiscation made.

6. There is no dispute to the fact that the documents that were produced by the petitioner though at the stage of the show cause notice were original tax invoices issued by the petitioner. No enquiry was made to doubt the genuineness of such tax invoices or to doubt the date of issue of such invoices. Thus, all tax invoices produced by the petitioner to cover the disputed goods are dated 31.07.2021. No enquiry appears to have been made from the revenue authorities in the State of Punjab to confirm if the transactions were genuine. Then, it is not the case of the revenue that the goods found transported were different from the goods disclosed in the tax invoices produced by the petitioner. No enquiry was conducted by the respondent authorities either from the purchasing dealers or the Assessing Authority to doubt the transaction at the end of the consignee.

7. In view of the above lack of enquiry and lack of reasonable doubt, the continued seizure and confiscation as also the demand of tax and penalty is based solely on presumptions and conjectures. While the mistake claimed by the petitioner gave rise to the valid suspicion with the revenue authorities inside State of U.P. as to the genuineness of the transaction as an inter-state sale claimed (at that stage orally), however, upon furnishing of the original tax invoices at the stage of the show cause notice itself, initial onus that rested on the assessee was discharged. Thereafter, it was for the revenue authorities to conduct proper enquiry and or lead other evidence to establish that the tax invoice being set up by the petitioner were bogus or otherwise not referable to the transaction in question. Genuineness of the tax invoice once not doubted is prima facie primary evidence as to the genuineness of the transaction. The petitioner is a registered dealer. He has issued tax invoice after charging Integrated Goods and Services Tax. That evidence being undoubted, the seizure and confiscation and consequent demand of tax and penalty is based on no cogent material and evidence.

8. Consequently, though the detention did not suffer from any illegality, however, the further orders of the seizure etc. are found to be not based on any material or evidence on record. Accordingly, the impugned orders dated 7.10.2021 and 9.2021 are set aside. The goods as also vehicle may be released forthwith.

9. Present petition stands allowed.

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