Shiv Enterprises Vs State of Punjab (Punjab and Haryana High Court)
GST authorities cannot detain goods on the ground of inadmissible ITC
The Hon’ble Punjab and Haryana High Court in M/s. Shiv Enterprises v. State of Punjab and others [CWP-18392-2021 dated February 04, 2022] held that, GST Authorities cannot detain goods in conveyance without passing appropriate orders if goods are accompanied with the documents as prescribed and cannot proceed against the taxpayer for contravention of any provision of the Central Goods and Services Tax Act, 2017 (the CGST Act). Further held that it is not the liability of the taxpayer to find out that whether or not other person in the supply chain has paid the tax and is the fundamental legal principle, that the law does not compel a man to do that which he cannot possibly perform.
Facts:
M/s. Shiv Enterprises (“the Petitioner”) is engaged in selling copper scrap. The Petitioner sold scrap to its customer and while the goods were in transit, the vehicle containing such goods were checked and were detained inspite of producing all the documents. Subsequently order for physical verification / inspection of the conveyance, goods and documents in Form MOV-02 was issued and conveyance was stationed at the office of Assistant Commissioner (“the Respondent”).
Further no other order was passed within 14 days as per the procedure under Section 129(6) of the CGST Act nor the goods were released. Later, the Petitioner filed reply to Form GST MOV-02 through e-mail and was intimated that inward supply to the sellers/suppliers of the Petitioner did not have inward supply and is only engaged in outward supply and not paying any tax. Thus, the Petitioner is liable to be proceeded under Section 130(1) CGST Act.
The Respondent contended that the Petitioner has evaded tax in several occasions and the procured goods are covered by fraudulent invoices generating by the non-existent firms to claim inadmissible ITC in clear violation of Section 16(2)(c) of the CGST Act, which is why Show Cause Notices (“SCNs”) under Section 130 of the CGST Act were issued.
Being aggrieved, the Petitioner has filed this petition, challenging the detention of the goods under Section 129 of the CGST Act and for release of the same.
Issue:
Whether the Respondents can detain goods on grounds of inadmissible ITC without any explanation as per Section 129(6) of the CGST Act even after furnishing all the statutory documents?
Held:
The Hon’ble Punjab and Haryana High Court in CWP-18392-2021 dated February 04, 2022 held as under:
