Case Law Details
Vishal Steel Supplier Vs State of U.P. (Allahabad High Court)
Summary: In the case of Vishal Steel Supplier v. State of U.P., the Allahabad High Court addressed the detention of goods during transit. The petitioner, transporting goods from Muzaffarnagar to Ghaziabad, was stopped in Hapur under the pretext that the route taken was not standard and the driver had a mobile number of a local dealer. However, the court found no discrepancies in the documentation accompanying the goods, including a tax invoice and e-way bill. The court highlighted that the Goods and Services Tax Act, 2017 (CGST Act) does not mandate the disclosure of a specific transportation route, a requirement that existed under the previous VAT regime. The High Court quashed the detention orders, stating that the authorities could only act when there is a lack of genuine documentation, which was not the case here. Additionally, the court ruled that without evidence of intent to evade tax, the detention of goods was unjustified, thereby mandating the refund of any amounts deposited by the petitioner. This judgment clarifies the legal stance on transportation routes under GST, reinforcing that sellers are not obligated to specify routes for goods in transit.
Introduction: The Hon’ble Allahabad High Court in the case of Vishal Steel Supplier v. State of U.P. [Writ Tax No. 741 of 2020 dated July 16, 2024], found the detention of goods unjustified and that, unlike the Value Added Tax Act, 2008 (“the VAT Act”), there is no specific provision in the Goods and Services Tax Act, 2017 (“the CGST Act”) which requires Assessee to disclose the route of transportation. Consequently, the Court quashed the detention orders and mandated the refund of any amount deposited.
Facts:
Mr. Vishal Steel Supplier (“the Petitioner”) was transporting goods from Muzaffarnagar to Ghaziabad, accompanied by a tax invoice, e-way bill and etc. However, the goods were intercepted at Hapur, where the officer intercepted the goods on the pretext that the route taken was not normal and the truck driver was having mobile number of a dealer of Hapur district. Therefore, inference was drawn that the goods will be unloaded at District Hapur without having any proper document.
No discrepancies in the documentation were found during the interception and that there was no evidence of intent to evade tax. Additionally, it was asserted that under GST framework, there is no requirement to disclose a specific transportation route.
Since, it was crushing season and on the way at Moti Nagar, various sugar mills are situated, hence, there was heavy traffic jam and in order to avoid the same, the driver of the goods, had taken another route for Ghaziabad via Hapur.
The Petitioner was served Orders dated July 30, 2020, and December 10/11, 2019 (“the Impugned Orders”), regarding the detention of goods.
Hence, aggrieved by the Impugned Orders, the Petitioner filed the present writ petition.
Issue:
Whether it is necessary to disclose the route of transportation of goods under the GST Law?
Held:
The Hon’ble Allahabad High Court in Writ Tax No. 741 of 2020 held as under:
- Relied on, the judgement of the Hon’ble Allahabad High Court in the case of Om Prakash Kuldeep Kumar v. Additional Commissioner Grade-2 [[2024] 83 GSTL 71], wherein it was held that under the CGST Act, there is no specific provision which bounds the selling dealer to disclose the route to be taken during transportation of goods or while goods are in transit. However, there was a provision under VAT Act to disclose the route during transportation of goods to reach its final destination. The power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the CGST Act. The genuineness of the documents has not been disputed at any stage.
- Held that, under the CGST Act, there is no specific provision that bounds the selling dealer to disclose the route to be taken during the transportation of goods or while goods are in transit however, there was a provision under the VAT Act to disclose the route during transportation of goods to reach its destination. Hence, the Court allowed the writ petition by quashing the Impugned Orders and mandated the refund of any amount deposited by the Petitioner.
Our Comments:
Rule 138A of the CGST Rules was substituted vide Notification No. 12/2018-dated March 07, 2018. Rule 138A of the CGST Rules, states the “Documents and devices to be carried by a person-in-charge of a conveyance”.
Rule 138A(1) of the CGST Rules states that the person in charge of conveyance shall carry:
a. the invoice or bill of supply or delivery challan, as the case may be; and
b. a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner. However, this will not apply in case of movement of goods by rail or air or vessel. Also, in case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM GST EWB-01. However, anything contained under Rule 138A(1)(b) of the CGST Rules, the Commissioner by notification require the person in-charge of the conveyance to carry the tax invoice or bill of supply or bill of entry or a delivery challan, where the goods are transported for reasons other than by way of supply.
Further, as per Rule 138A (2) of the CGST Rules, in case, invoice is issued in the manner prescribed under Rule 48(4) of the CGST Rules, the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice.
Furthermore, where the registered person uploads the invoice under sub-rule (2), the information in Part A of FORM GST EWB-01 shall be auto-populated by the common portal on the basis of the information furnished in FORM GST INV-1.
Lastly, the Commissioner may, by notification, require a class of transporters to obtain a unique Radio Frequency Identification Device and get the said device embedded on to the conveyance and map the e-way bill to the Radio Frequency Identification Device prior to the movement of goods.
Hence, it’s important to note that the Rule does not mandate sellers to disclose a specific route before moving their goods. Furthermore, the FORM GST EWB – 01 (E-Way Bill), itself does not include any requirement to specify the route. Instead, it focuses on the details such as the type of goods, the seller, the buyer, place of delivery and the type of vehicle used for transportation. This reinforces the principle that Authorities should not penalize for taking an alternate route, especially when all necessary documentation is in order and there is no indication of any wrongdoing.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mr. Praveen Kumar for the petitioner and Mr. Ravi Shankar Pandey, learned ACSC for the State-respondents.
2. By means of present petition, the petitioner is prayer, inter alia, for the following reliefs:-
“(i) Issue a writ, order or direction, in the nature of certiorari quashing the order dated 30.7.2020 passed by the respondent No. 3 in Appeal No. 2274 of 2019, M/s. Vishal Steel Supplier Vs. Assistant Commissioner, Commercial Tax, Mobile Squad, Unit 10, Ghaziabad.
(ii) Issue a writ, order or direction in the nature of certiorari quashing of order dated 10/11.12.2019 passed by respondent No. 4.”
3. Learned counsel for the petitioner submits that goods in question were on its onward journey from Muzaffarnagar to Ghaziabad accompanying all the requisite documents as required under the law i.e. tax invoice, e-way etc. however the same were intercepted at distt. Hapur but at the time of interception no discrepancy whatsoever was found with regard to quality, quantity as well as description of the goods in question. The goods were detained only on the basis of surmises and conjunctures that the goods were not on its normal route and driver of the goods was having mobile number of one dealer of distt. Hapur, therefore, an inference has been drawn that the goods is likely to be unloaded at distt. Hapur without having proper documents.
4. Learned counsel for the petitioner further submits that under the G.S.T. regime, there is no provision for discloser of the route prior to movement of the goods. He submits that the said discloser was in the erstwhile regime i.e. under the VAT Act. He further submits that since it was crushing season and on the way at Moti Nagar, various sugar mills are situated, hence, there was heavy traffic jam and in order to avoid the same, the driver of the goods, has taken another route for Ghaziabad via Hapur. He further submits that goods in question were detained on the way of Ghaziabad via Hapur.
5. In support of his submission, learned counsel for the petitioner has relied upon the judgement of this Court in the case of Allahabad High Court in the case of Om Prakash Kuldeep Kumar v. Additional Commissioner Grade-2 (2024 UPTC Vol. 116 -19).
6. He further submits that there is no finding recorded by any of the respondent authority that there was any intention to avoid the payment of tax and in the absence of any such finding, the proceeding cannot legally be initiated against the petitioner. He prays for allowing the present writ petition.
7. Per contra, learned Additional Chief Standing Counsel supports the impugned order and submits that the goods in question were likely to be sold at distt. Hapur without paying appropriate taxes and it is evident that truck was found near distt. Hapur in stead of Ghaziabad. He further submits that truck was not on its normal route but the same was on its different route, therefore, the proceeding has rightly been initiated against the petitioner. He prays for dismissal of the present petition.
8. After hearing learned counsel for the parties, the Court has perused the records.
9. It is not in dispute that the goods were coming from Distt. Muzaffarnagar and same was intercepted during transit. As per the document accompanying with the goods in question, no discrepancy was found. Further the goods in question were going up to Distt. Ghaziabad and same was intercepted at distt. Hapur under the pretext that it was not on its normal route as well as the driver of the truck was having mobile number of a dealer of Distt. Hapur, therefore, inference has been drawn that the goods in question will be unloaded at distt. Hapur without having any proper document.
10. It is also admitted that no discrepancy has been pointed out at the time of detention or seizure of the goods with regard to quality or quantity of the goods and the respondent authorities have also not recorded any finding with regard to mens ria to avoid the payment of tax.
11. It is also not the case of the respondents that under the GST Act, the dealer is required to disclose the specific route of its journey for movement of the goods. Learned ACSC also could not show that under the GST Act, the transporter of the goods has to adopt a particular route for transportation of the goods.
12. This Court in the case of M/s Om Prakash Kuldeep Kumar (supra) has held as under :-
“10. Another issue raised that the goods along with truck was not on the route of its destination, therefore, there was intention to evade tax. Under the GST Act, there is no specific provision which bounds the selling dealer to disclose the route to be taken during transportation of goods or while goods are in transit however there was a provision under VAT Act to disclose the rout during transportation of goods to reach its final destination. Once the legislature itself in its wisdom has chosen to delete the said provision, this Court opined that the authorities were not correct in passing the seizure order even if the vehicle was not on regular route or on different route.
11. The power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the Act. The genuineness of the documents has not been disputed at any stage.”
13. Further the respondent authorities have not recorded any finding with regard to intention to avoid the payment of tax, in other words the mens ria is absent. Once there is no finding with regard to mens ria to avoid the payment of tax, the impugned order cannot be sustained in the eyes of law on this ground also.
14. In such circumstance, the writ petition is allowed. The impugned orders dated 30.7.2020 and 10/11.12.2019 are hereby quashed.
15. Any amount deposited by the petitioner in the present proceeding shall be refunded to the petitioner within one month from the date of production of certified copy of this order.
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