Case Law Details
CEAT Limited Vs State of Gujarat & Anr. (Gujarat High Court)
Order was passed. Such order was unsuccessfully challenged in appeal. Hence, petition was filed. The Hon’ble High Court of Gujarat allowed the writ petition and set aside the orders.
The petitioner is a leading manufacturer of tyres. It sent goods from depot in Maharashtra to its factory at Halol, Gujarat. There was no sale involved. An invoice was prepared. An E way bill was generated. However, the goods were intercepted at Vadodara. It was alleged that Part B of the E-way bill did not contain the truck number and hence, penalty (equal to tax) must be visited on the petitioner. Order was passed. Such order was unsuccessfully challenged in appeal. Hence, petition was filed. The Hon’ble High Court of Gujarat allowed the writ petition and set aside the orders. It held: (i) section 12(14) provides for imposition of penalty of Rs.10,000/- only and the authorities have not assigned any reasons for imposition of penalty equivalent to tax; (ii) penalty must not be visited for technical violations such as non mention of truck number on Part B of E way bill (iii) refers to and relies on several judgments of Hon’ble High Court of Gujarat and Hon’ble Allahabad High Court on the said issue; (iv) remits matter to the original authority to pass reasoned order in light of the above decisions.
non mention of truck number on Part B of E way bill
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard learned advocate Mr.Bharat Raichandani with learned advocate Mr.Love Sharma for learned advocate Mr.Aditya Parikh for the petitioner, learned Assistant Government Pleader Ms.Shrunjal Shah respondent No.1 and learned advocate Mr.Utkarsh Sharma for respondent No.2.
1.1 Rule, returnable forthwith. Learned advocate for the respective parties waives service of notice of Rule on behalf of the respective respondents.
1.2 Having regard to the controversy in narrow compass, with the consent of learned advocates appearing for the respective parties, the matter is taken up for final consideration.
2. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs.
“(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner case and after going into the validity and legality thereof quash and set aside impugned order dated 12.03.2021 (ANNEXURE “A”);
(b) that this Hon’ble Court may be pleased to issue Any writ, order or direction more particularly in the nature of a Writ of Declaration to declare and hold that section 129 of the CGST and Gujarat GST Act, 2017 is arbitrary and violative of Article 14 of the Constitution and pass such further or other orders as this Hon’ble Court may deem fit and necessary in the facts and circumstance of the case and thus render justice;
(c) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction, directing the Respondent to allow the Halol unit of the Petitioner the credit of the duty amount paid at the time of release of goods under challan dated 10.11.2020 towards their output IGST liability;
(d) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction, invoking provisions of section 126 of the CGST Act and set aside the penalty;”
3. Facts in nutshell giving rise to this petition are as under.
3.1 The petitioner is engaged in the manufacture and sale of tyres, tubes and flaps falling under Chapter Heading 40 of the Central Excise Tariff Act, 1985. The petitioner is also registered under the provisions of the Central/Gujarat Goods & Service Tax Act, 2017 (for short ‘the GST Act’).
3.2 It is the case of the petitioner that the petitioner entered into agreement with Sandhya Container Movers, Mumbai for transportation of tyres, tubes and flaps from its warehouse located at Mumbai to its Halol Plant. The petitioner transported 20160 Kg. of natural rubber to its Halol Plant on 04th November, 2020 along with the E-invoice and E-way bill.
3.3 During the transport of the said goods by the Truck No.MH-46BB-2489, GST Officer, Vadodara-1 intercepted the conveyance and recorded statement of the driver of the Truck carrying the goods under Form MOV-01. Thereafter the order for inspection of the Truck and the goods were issued in Form GST MOV-02 dated 04th November, 2020.
3.4 During the inspection, it was recorded that the goods were accompanied by E-way Bill No.291235216649 and E-invoice dated 29th October, 2020.
3.5 It was found in the inspection that E-way bill was not valid and therefore the goods and the Truck was detained under Section 68(3) and show-cause notice under Section 129(3) of the GST Act was issued in Form GST MOV-07 dated 05th November, 2020 for calling upon the petitioner to pay tax and penalty of Rs. 01,32,774/- totaling to Rs. 02,65,548/-.
3.6 The respondent No.2 immediately thereafter on the next date on 06th November, 2020 issued the order demanding tax and penalty in Form GST MOV-09. It was submitted by respondent No.2 that E-way bill is not valid as Part B of the E-way bill produced by the petitioner did not contain the correct details.
3.7 The petitioner, in order to see that the goods and the Truck are released, paid amount of interest and penalty by challan on 10th November, 2020.
3.8 The petitioner challenged order of demanding penalty and tax by preferring appeal before the appellate authority under Section 107 of the GST Act which was dismissed confirming order of tax and penalty vide impugned order dated 12th March, 2021.
4. Being aggrieved, the petitioner has preferred this petition with the aforesaid prayers.
5. Learned advocate Mr.Bharat Raichandani for the petitioner submitted that there was a minor lapse in Part B of the E-way bill. It was submitted that the Order-in-Original in Form MOV-09 is passed without assigning any reason.
5.1 It was submitted that respondent No.2 could not have imposed tax or penalty as the goods were moved from head office to plant of the petitioner which is also evident from the E-invoice dated 29th October, 2020 which clearly shows that the goods are transported from the petitioner company only to its Halol Plant.
5.2 It was submitted that there was procedural lapse in Part B of the E-way bill which is curable and does not impact any tax liability as per Rule 138 of the Central/Gujarat Goods and Service Tax Rules, 2017 (for short ‘the Rules’).
5.3 It was submitted that the invoices were changed in relation to the goods transported through Truck No.MH-46BB-2489 which can also be verified from LR No.3417 mentioned in E-way bill.
It was submitted that actual date entered into the E-way bill is of 04th November, 2020, whereas the goods have been transported on 02nd November, 2020 and therefore, there was procedural lapse and on pointing out the same, petitioner immediately corrected the Part B of the E-way bill showing the correct date of transport of the goods.
5.4 It was further submitted that the respondent authority, while passing the order, did not assign any reason and therefore, the same is liable to be quashed and set aside. It was submitted that the petitioner paid tax and penalty in order to release the goods and conveyance and therefore, the respondent authority could not have passed the order on assurances given by the petitioner for payment of tax and penalty.
5.5 It was submitted that the appellate authority, without considering the submissions made by the petitioner, has confirmed the order of interest and penalty after recording of facts and reproducing Rule 138 of the Rules in the impugned order. It was further submitted that thus both the orders i.e. MOV-09 as well as appellate order are non-speaking order and are liable to be set aside.
5.6 Learned advocate for the petitioner referred to and relied upon the decision of the Bombay High Court in case of Velcord Textiles v. Union of India reported in 1999 (111) ELT 351 (Bom), wherein it is held that right to reason is an indispensable part of a sound judicial system, reasons, at least, sufficient to indicate an application of mind to the matter before the Court. It was, therefore, submitted that the impugned order are without reasons and therefore, liable to be quashed and set aside.
6. On the other hand, learned advocate for the respondents submitted that the impugned order are passed for breach of Rule 138 of the Rules which is not in dispute and accordingly the petitioner has paid the tax and penalty for release of the Truck and the goods and therefore, now the petitioner cannot make grievance for levy of interest and penalty.
6.1 It was submitted that the impugned orders are not required to be interfered with while exercising extra-ordinary jurisdiction under Article 227 of the Constitution of India as the petitioner has failed to show any perversity in the impugned orders and therefore, there is no occasion for the respondent authority to assign any reason for imposing penalty and interest which is leviable under Section 139 of the GST Act read with Rule 138 of the Rules.
7. Having heard learned advocates for the respective parties, it is apparent from both the impugned order of levy of interest in MOV-09 as well as appellate order that no reasons are assigned for levying interest and penalty. Section 122 of the GST Act provides for levy of penalty. Sub-clause (14) of Section 122 provides for transportation of any taxable goods as may be specified in this behalf, levy of penalty is only Rs.10,000/-. Section 122(1)(xiv) read as under.
122. Penalty for certain offences.
(1) Where a taxable person who-
(i) to (xiii) … … …
(xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;
he shall be liable to pay penalty of Rs. 10,000/- or an amount equivalent to tax evaded or tax not deducted under Section 51 or short deducted or deducted but not paid to the Government or not collected under Section 52 or short collected or collected but not paid to the Government or inpur tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.
7.1 Considering the above, the respondent authority ought to have assigned reason for levy of penalty of R.01,32,774/- as well as levy of tax when the goods were admittedly not by E-invoice for sell but the goods were transported from head office to Halol plant of the petitioner and therefore, it can be said to be transfer of goods between the two establishments of the petitioner.
8. At this stage, it is to be noted that the petitioner has relied on the following decisions.
(i) Orson Holdings Company Ltd. v. Union of India reported in 2023(71) G.S.T.L. 144 (Guj.);
(ii) VSL Alloys (India) Pvt. Ltd. v. State of U.P. reported in 2018(17) G.S.T.L. 191 (All.);
(iii) Neuvera Wellness Ventures Pvt. Ltd. v. State of Gujarat reported in 2019(26) G.S.T.L. 3 (Guj.)
8.1 Considering the above decisions, this Court in case of Dhabriya Polywood Ltd. v. Union of India reported in 2022 (64) G.S.T.L. 259 (Guj) has relied on the Circular of the CBIC dated 14th September, 2018 and has held as under.
“7. The circular makes it clear that in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, the proceedings under Section 129 of the CGST Act may not be ordinarily initiated, more particularly, in the situation, as highlighted in para 5 of the circular.
8. We are of the view that the goods of the writ applicant fall within Clause 5 of the circular referred to above. The manner in which the writ applicant has proceeded so far and also having regard to the fact that very promptly he brought to the notice of the authority concerned and admitted its mistake, we would like to give the writ applicant some benefit of doubt.
9. In view of the aforesaid, this writ application succeeds and is hereby allowed. The impugned notice issued by the respondent No.3 in Form GST MOV – 07 dated 12th April 2022 is hereby quashed and set aside. Consequently, the order of detention passed by the respondent No.3 under Section 129(1) of the CGST Act in Form GST MOV – 06 dated 12th April 2022 is also hereby quashed and set aside. The goods and the conveyance shall be released at the earliest.”
8.2 In case of Orson Holdings Company Ltd. (supra), while considering the provisions of Section 129, it was held as under.
“6. Having heard both the sides, at the outset, it is to be noted that in case of Shree Govind Alloys Pvt. Ltd. (supra), the respondent had challenged the authority of the respondent demanding the tax and penalty under Section 129(3) of the Central Goods & Services Tax Act, 2017, where the goods, which were to be delivered on or before 17.10.2022, could not be delivered in time and on 19.10.2022 when inspected, some of the e-Way bill numbers had shown expired. The entire truck along with the goods had been seized on account of expiration of the e-Way bill. Therefore, the Court had, after a detailed consideration, held that e-Way bill had expired 41 hours before and the release of goods of conveyance and transit through the authority concerned. Relevant observations are made in paragraphs 6 to 10 are as under :
“6. We have heard learned advocates on both the sides and also have considered the material on the record. We notice section 129, which provides as under:
129. 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.
(2) xxx xxx xxx
(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 subsection (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred in subsection(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 fro the date of receipt of the copy of the order passed under subsection (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-section93) 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 deprecate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.”
7. It is not in dispute that in the instant case, e-Way Bill had expired 41 hours before and the release of goods of conveyance and transit through the authority concerned.
8. We could notice that the detention is also on the ground that the goods are of expiration of the eWay bill number, which had expired during the transit and the same cannot be the ground for detaining and seizure of M.S. Billet along with the vehicle truck.
9. This Court in Govind Tobacco Manufacturing Co. vs. State of U.P., [2022] 140 com 383 (Ahhahabad) has held that as there is expiry of eWay bill on transit, the seizure of said vehicle and the goods is not permissible under the law. In the case before the High Court of Madhya Pradesh at Jabalpur in M/s. Daya Shaker Singh vs State of Madhya Pradesh passed in Writ Petition No.12324 of 2022 on 10.08.2022, where also the Court had intervened considering the fact that the respondent could not establish any element of evasion of tax with fraudulent intent or negligence on the part of the petitioner. Delay was of almost 41/2 hours before the e-Way bill could expire. It appeared to be bona fide and without establishing any fraudulent intention. Here also what is found is that there is no fraudulent intention for this to happen.
10. Resultantly, present petition stands allowed. The impugned order dated 04.11.2022 demanding the sum of Rs.7,53,364/- is quashed and set aside. The order of detention dated 19.10.2022 as well as the notice issued under section 129(3) of the Act dated 19.10.2022 are also quashed and set aside.”
7. In the instant case also, as we could notice that the goods of the said vehicle has been detained at 6:05 p.m. at Amirgadh on 27.9.2018, after about expiry of 48 years. This case is squarely covered by the decision of this Court which has not been further challenged and even otherwise, from the facts which are robust in nature, it can be gathered that there does not appear to be any ill-intent on the part of the petitioner to use the expired e-Way bill. The company is situated at Howrah, West Bengal and the place of delivery was Jamnagar, Gujarat and in transit, this e-Way bill has expired.”
8.3 In case of VSL Alloy (India) Pvt. Ltd. (supra), the Allahabad High Court has held as under.
“14. In the present case, all the documents were accompanied the goods, details are duly mentioned which reflects from the perusal of the documents. Merely of none mentioning of the vehicle no. in Part-B cannot be a ground for seizure of the goods. We hold that the order of seizure is totally illegal and once the petitioner has placed the material and evidence with regard to its claim, it was obligatory on the part of the respondent no.2 to consider and pass an appropriate reasoned order. In this case, no reasons are assigned nor any discussion is mentioned in the impugned order of seizure and notice of penalty. The respondent no.2 has also not considered the above notification dated 07.03.2018.”
8.4 In case of Neuvera Wellness Venture Pvt. Ltd. (supra), this Court ha held as under.
“9. For the reasons that follow, this court does not intend to enter into the merits of the submissions advanced by the learned advocate for the petitioners as regards the liability or otherwise to pay tax and penalty and the quantum of tax payable by the petitioners. A perusal of the impugned order dated 2.4.2019 passed by the second respondent in FORM GST MOV-09 whereby tax and penalty have been demanded, reveals that the basis for computing the additional tax is the IGST paid by the petitioners. Moreover, in the impugned order there is not even a whisper as regards the submissions advanced on behalf of the petitioners, nor have the same been dealt with in the body of the order. No reasons have been assigned by the second respondent for the purpose of holding the petitioner liable to payment of tax and penalty despite the fact that IGST had already been paid on such transaction and the goods were being moved from the customs warehouse to the petitioner’s own godown and it being the case of the petitioners that there was no supply, and hence, the provisions of GST Act are not applicable. The impugned order is, therefore, totally bereft of any reasoning. Reasons, it is well known, are the heart and soul of an order passed by a judicial/quasi-judicial order, without which it is difficult to pronounce one way or other as regards the validity of such order. In the absence of any reasons to support the findings given by a judicial/quasi judicial authority, it is not possible to ascertain as to how the authority came to a particular conclusion. Under the circumstances, in the absence of any reasons in support of the tax and penalty levied by the second respondent, the impugned order stands vitiated as being an unreasoned order and as such cannot be sustained. However, the matter is required to be restored to the file of the second respondent for deciding the same afresh in accordance with law by passing a speaking order after duly considering the submissions advanced by the petitioners.
10. However, the goods of the petitioner being perishable goods, it would not be just, proper and reasonable to keep such goods under detention any longer. Under the circumstances, the petitioners would be entitled to the release of the conveyance as well as the goods in question subject to compliance of clause (c) of section 129(1) of the CGST/GGST Acts.
11. For the foregoing reasons, the petition partly succeeds and is, accordingly allowed to the following extent:
The impugned order dated 2.4.2019 passed by the second respondent (Annexure-H to the petition) is hereby quashed and set aside. The matter is restored to the file of the second respondent who shall decide the same afresh in accordance with law after giving an opportunity of hearing to the petitioner. It need not be stated that the second respondent shall pass a speaking order, dealing with all the contentions raised by the petitioners. In the meanwhile, as the goods in question are perishable goods, for the purpose of grant of immediate relief to the petitioners, the goods in question together with truck No.MH-43-U-8620 are ordered to be released, subject to the petitioners furnishing security by way of bond of an amount of rupees twelve lakhs (Rs.12,00,000/-) to the respondent authorities. It is clarified, that this court has directed the petitioners to furnish security of Rs.12,00,000/- only for the purpose of granting immediate relief to the petitioners as the goods in question are perishable goods, and the same shall not be construed as if this court has expressed any opinion that the petitioner is liable to pay such amount of tax and penalty. The liability of the petitioner shall be considered independently on the basis of the submissions advanced by the learned advocate for the petitioner, namely, that IGST has already been paid on the goods in question and that there is no transaction of supply in the present case and any other submission that may be made before the second respondent. Rule is made absolute accordingly to the aforesaid extent. Direct service is permitted.”
8.5 In case of Varun Beverages Ltd. v State of U.P. reported in 2023 (71) G.S.T.L. 4 (All.), it was held by the Allahabad High Court as under.
“7. The sole controversy engaging the attention of the Court is as to whether the wrong mention of number of Vehicle No. HR73/6755 through which the goods were in transit and detained by the taxing authorities would be considered as a human error and will be covered under the circular No. 41/15/2018-GST dated 13.04.2018 and 49/23/2018-GST dated 21.06.2018, as the number mentioned in the e-way bill was UP-13T/6755 and the mistake is of only of HR-73 in place of U.P.-13T.
8. It is not in dispute that goods were being transported by the dealer through stock transfer from its unit at Gautam Buddha Nagar to its sale depot at Agra. The bilty which is the document of the transporter mentions the vehicle number as HR-73/6755. From perusal of the e-way bill which has been brought on record, it is clear that the vehicle number has been mentioned as UP-13T/6755. It is apparently clear that mistake is as far as the registration of the vehicle in a particular State and in place of HR-73, UP-13T has been mentioned in the e-way bill, while number of the vehicle 6755 is same.
9. As there is no dispute to the fact that it is a case of stock transfer and there is no intention on the part of dealer to evade any tax, the minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty under Section 129 and the order passed by the detaining authority as well as first appellate authority cannot be sustained. Moreover, the Department has not placed before the Court any other material so as to bring on record that there was any intention on the part of the dealer to evade tax except the wrong mention of part of registration number of the vehicle in the eway bill. The vehicle through which the goods were transported and the bilty showed the one and the same number while only there is a minor discrepancy in Part-B of the e-way bill where the description of the vehicle is entered by the dealer.”
9. Considering the above conspectus of law and the respondent authorities having not assigned the reasons, the impugned orders are not sustainable and are accordingly quashed and set aside. The matter is remanded back to respondent No.2 to pa fresh de novo order after giving opportunity of hearing to the petitioner by assigning reasons in detail taking into consideration the above decisions while passing the order in accordance with law.
9.1 Such exercise shall be completed within a period of 12 weeks from the date of receipt of copy of this order.
10. Petition is allowed partly accordingly.
Rule is made absolute to the aforesaid extent. No order as to cost.
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