Case Law Details
SASI Pathirakunnath Vs Assistant State Tax Officer (Intelligence) (Kerala High Court)
Kerala High Court held that discrepancy in quantity in the documents is sufficient for department to suspect the evasion of tax. Accordingly, initiation of proceedings u/s 130 of CGST/ SGST valid.
Facts- The first petitioner is stated to be the proprietor of an establishment known as ‘A One Gold’, having its place of business at Chembukavu in Thrissur district. The 2nd petitioner is an acquaintance of the 1st petitioner. The 2nd petitioner was travelling on a train from Thrissur to Alleppy on 07.09.2022. He was carrying some gold ornaments from Thrissur to Alleppy, at the instance of the 1st petitioner.
2nd petitioner was detained at about 02.35 pm by the officials of the Railway Protection Force (RPF). On being questioned as to the documents available with the 2nd petitioner for carrying the gold, he is stated to have shown certain documents on his mobile phone, which did not appear satisfactory to the Railway Protection Force.
2nd respondent initiated and concluded the proceedings u/s 130 of CGST/SGST Act which is under challenge in this writ petition.
Conclusion- There is no satisfactory explanation for the fact that there was a discrepancy in the quantity mentioned in the documents produced by the 1st petitioner in the evening before the Tax authorities and the quantity actually recovered from the petitioner.
The fact that there was discrepancy in the quantity in the documents stated to have been produced and the quantity recovered from the 2nd petitioner itself, in my opinion, is sufficient for the Department to suspect the evasion of tax.
I do not propose to find anything on merits regarding the order of adjudication issued by the 2nd respondent under Section 130 of the CGST/SGST Acts for the reason that it would not be proper to do so, considering the fact that the petitioners have appellate remedies against Ext.P18 order. Therefore, this question is being considered only for the purpose of deciding whether the officers were right in initiating proceedings under Section 130 of the CGST/SGST Acts. In the totality of the facts and circumstances of the case, I am unable to find that there was any malice or ill-will or lack of jurisdiction in initiating proceedings under Section 130 of the CGST/SGST Acts. I make it clear that I have not found that Ext.P18 order is valid on its merits and it will be open to the petitioners to raise all their contentions before the appellate authority in a duly constituted appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The first petitioner is stated to be the proprietor of an establishment known as ‘A One Gold’, having its place of business at Chembukavu in Thrissur district. The 2nd petitioner is an acquaintance of the 1st petitioner. The 2nd petitioner was travelling on a train from Thrissur to Alleppy on 07.09.2022. He was carrying some gold ornaments from Thrissur to Alleppy, at the instance of the 1st petitioner.
2. The 2nd petitioner was detained at about 02.35 pm by the officials of the Railway Protection Force (RPF). On being questioned as to the documents available with the 2nd petitioner for carrying the gold, he is stated to have shown certain documents on his mobile phone, which did not appear satisfactory to the Railway Protection Force. Thereafter, by about 05.55 pm, the 1st petitioner reportedly brought certain documents, which according to the 1 st petitioner were sufficient to establish that the gold was being bona fide transported with full compliance of the GST laws. The railway police, however, entrusted the matter with the GST Department. It is the case of the petitioners that, by the time, the GST officials had intercepted the goods, the goods were having every document necessary to prove that they were being transported in full compliance with the GST laws. It is submitted that notwithstanding the above and completely ignoring the documents available with the petitioners, the 2nd respondent initiated and concluded proceedings under Section 130 of the CGST/SGST Acts as per Ext.P18, which is under challenge in this writ petition.
3. It is the case of the learned counsel appearing for the petitioners that there was absolutely no warrant for initiation, continuation and conclusion of proceedings under Section 130 of the CGST/SGST Acts and therefore, Ext.P18 order is completely without jurisdiction. It is submitted that when the goods in question were supported by valid documents, the action of the officers in initiating and concluding proceedings under Section 130 of the CGST/SGST Acts was completely unwarranted and without jurisdiction.
4. Learned Senior Government Pleader would submit that even if it were to be assumed that the interception can only be with respect to the time at with the notices under the CGST/SGST Acts were issued (05.55 pm on 07.09.2022), the proceedings initiated and concluded against the petitioners under Section 130 of the CGST/SGST Acts cannot be said to be vitiated in any manner. It is submitted that immediately after the RPF had intercepted the goods, the goods were subject matter of physical verification and the physical verification report suggests that the quantity of gold ornaments recovered from the 2nd petitioner had a total weight of 724.99 gms whereas the labour invoice and other documents produced to substantiate that the goods were being transported in a bona fide manner, showed that the total quantity was approximately 825 gms. It is submitted that this discrepancy itself is sufficient to prove that the proceedings under Section 130 of the CGST/SGST Acts was completely warranted as there was clear attempt to evade payment of tax. It is submitted that the subsequent explanation offered by the 2nd petitioner that he had forgotten to handover about 100 gms of gold, which he was carrying in his pocket, is nothing but an afterthought and is an attempt to ensure that the quantity of goods seized by the railway police and which was subsequently the subject matter of proceedings under the CGST/SGST Acts, completely tallys with the documents stated to have been produced later by the 1 st petitioner before the authorities. It is submitted that the there is nothing to show that the discrepancy was not on account of any illegal sale during the course of carriage.
5. Learned counsel appearing for the petitioners, in reply, would submit that when the goods were completely covered by documents, the mere fact that there was some discrepancy in the total quantity is no ground to initiate proceedings under Section 130 of the CGST/SGST Acts. He refers to the provision of Section 130 of the CGST/SGST Acts and submits that proceedings under Section 130 of the CGST/SGST Acts could have been initiated only if there was a wilful attempt to evade the payment of tax. It is submitted that even if the entire case of the GST Department is accepted, there is nothing to show that there was any attempt to evade the payment of any tax rightly due to the Government. It is submitted that the proceedings are therefore liable to be
6. I have considered the contentions raised. The undisputed facts of the case are that the 2nd petitioner was carrying certain gold ornaments in a train from Thrissur to He was initially intercepted by the officials attached to the Railway Protection Force and the 2nd petitioner was able to only shown certain documents on his mobile phone, which according to the petitioners, suggest that the gold ornaments were being carried in a valid manner and in accordance with all the requirements of the CGST/SGST Acts and the Rules made thereunder. It is also not disputed before me that, by the time, the State GST officers got involved in the matter, the 1 st petitioner had produced certain documents, which according to the petitioners, are sufficient to carry gold in the manner carried by the 2nd petitioner. However, there is no satisfactory explanation for the fact that there was a discrepancy in the quantity mentioned in the documents produced by the 1st petitioner in the evening before the Tax authorities and the quantity actually recovered from the petitioner. The contention of the learned counsel appearing for the petitioners that the 2nd petitioner had forgotten to hand over about 100 gms of gold, which was being carried in his pocket, cannot be accepted, at least at this stage. The fact that there was discrepancy in the quantity in the documents stated to have been produced and the quantity recovered from the 2nd petitioner itself, in my opinion, is sufficient for the Department to suspect the evasion of tax. I do not propose to find anything on merits regarding the order of adjudication issued by the 2nd respondent under Section 130 of the CGST/SGST Acts for the reason that it would not be proper to do so, considering the fact that the petitioners have appellate remedies against Ext.P18 order. Therefore, this question is being considered only for the purpose of deciding whether the officers were right in initiating proceedings under Section 130 of the CGST/SGST Acts. In the totality of the facts and circumstances of the case, I am unable to find that there was any malice or ill-will or lack of jurisdiction in initiating proceedings under Section 130 of the CGST/SGST Acts. I make it clear that I have not found that Ext.P18 order is valid on its merits and it will be open to the petitioners to raise all their contentions before the appellate authority in a duly constituted appeal.
The writ petition is therefore dismissed, without interfering with Ext.P18 order and holding that it will be open to the petitioners to raise all their contentions before the appellate authority. On such appeal being filed, the appellate authority shall consider the matter untrammeled by any observations contained in this judgment. If the petitioners file an appeal within a period of two weeks from today, the period from 11.10.2022 (date of issuance of Ext.P1 8 order) till today (18.01.2023) shall be excluded for the purposes of determining any period of limitation within which such appeal had to be filed.
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