Case Law Details
Vrs Foods Ltd Vs Additional Commissioner (Allahabad High Court)
SEO Title: VRS Foods: Delivery Challan Must Accompany Goods
The Allahabad High Court has ruled that a delivery challan must accompany goods in transit, even if they are only being transported for weighment. The court’s decision came in the case of VRS Foods Ltd vs. Additional Commissioner, where it upheld a penalty imposed on the company for transporting goods without proper documentation. The judgment reinforces the position that the absence of requisite documents at the time of interception is a clear violation of the Goods and Services Tax (GST) laws, regardless of the company’s subsequent claims.
The dispute arose after a truck carrying a consignment of battery scrap from VRS Foods Limited was intercepted by a mobile squad of the Commercial Tax Department in Ghaziabad. At the time of the interception, no documents whatsoever were available with the driver. A show cause notice was issued, leading to a detention order. In its reply, the company contended that the truck was merely en route to a nearby weighbridge, Balaji Dharmkanta, and a Gate Pass had been issued but was not carried by the driver. The company also argued that under Rule 138(14)(n) of the GST Rules, no documents are required for goods sent for weighment within a 20-kilometer radius. They further highlighted that the consignee, M/s Shiva Traders, had later accepted the goods and made the payment, indicating there was no intent to evade tax.
The tax authorities, however, maintained that the absence of documents at the point of interception was a fundamental violation. They argued that documents produced at a later stage do not negate the initial default. The Assistant Commissioner subsequently issued an order imposing a penalty, which was partially reduced on appeal by the Additional Commissioner. The company then challenged this order in the High Court, reiterating its claim that the goods were only being transported for weighment and that there was no dishonest intent.
After reviewing the case, the High Court concurred with the tax authorities. The court noted that it was undisputed that no documents were present with the goods at the time of interception. The court held that the company’s argument—that a delivery challan was not needed for goods sent for weighment—could not be accepted. The bench reasoned that accepting such a plea would fundamentally “frustrate the very purpose of Section 129, read with Rules 138, of the Act.” This section is designed to ensure that the transport of goods is accompanied by necessary documents to prevent tax evasion and track the movement of goods in real time.
The court did not refer to any specific judicial precedents by name but relied on a direct and strict interpretation of the legal provisions. Its holding underscores the principle that the compliance requirement is tied to the moment of transit and interception, not to an opportunity for later submission. The court concluded that since the essential documentation was missing when the truck was stopped, the actions taken by the tax authorities were in accordance with the law. Consequently, the court found no reason to interfere with the lower authorities’ orders and dismissed the writ petitions. The decision serves as a reminder to businesses of the importance of ensuring all required transport documents, including delivery challans, are physically present with goods during transit, regardless of the distance or purpose of the movement.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
Heard Shri Suyash Agarwal, learned counsel for the petitioner and Shri Ravi Shankar Pandey, learned ACSC for the State – respondents.
2. Since learned counsel for the parties submit that the issues involved in these writ petitions are similar, therefore, the same are being decided by the common order. With the consent of the parties, Writ Tax No. 1016 of 2022 is taken as a leading case for deciding the controversy involved in these writ petitions.
Writ Tax No. 1016 of 2022
3. The instant writ petition has been filed against the impugned order dated 28.04.2022 passed by the Additional Commissioner, Grade – 2 (Appeals) IV, Ghaziabad as well as the impugned order dated 08.03.2022 passed by the Assistant Commissioner, Commercial Tax, Mobile Squad Unit – VII, Ghaziabad under section 129(3) of the UP GST Act.
4. Learned counsel for the petitioner submits that the petitioner has sold battery scrap to one M/s Shiva Traders, Ghaziabad. He further submits that the truck in question was sent to Balaji Dharmkanta for weighment, for which Gate Pass No. 3000070592 dated 25.02.2022 was issued by the petitioner, but the truck driver without taking the same, went for weighment and on its return, the truck was intercepted and detention order was passed on 28.02.2022 and a show cause notice was issued on the ground that no documents, whatsoever, were accompanying the goods. The petitioner submitted its reply to the show cause notice. Not being satisfied with the same, the impugned order dated 08.03.2022 was passed under section 129(3) of the UPGST Act, against which the petitioner preferred an appeal, but the same has been partly allowed vide impugned order dated 28.04.2022 by reducing the penalty and fixing the same at Rs. 1,43,100/-.
5. Learned counsel for the petitioner further submits that the goods in question were sent for weighment and as per rule 138 (14)(n) of the GST Rules, no documents are required if the goods are being sent for weighment within 20 kms. from the place of business. He further submits that after release of the goods, the consignee has accepted the goods and made payment through banking channel and therefore, levy of penalty is uncalled for. He further submits that there is no intention to evade payment of tax, for which penalty of such huge amount can be imposed.
6. Per contra, learned ACSC supports the impugned orders and submits that at the time of interception and seizure, no document, whatsoever, was produced. The document filed at a later stage is a clear-cut contravention of the provisions and the Rules that no documents, whatsoever, were accompanying the goods at the time of seizure or detention. He further submits that it is not the case of the petitioner that the goods in question were not liable for tax. Once the goods are liable to tax, even not accompanying the requisite document as prescribed under the Act, the action taken against the petitioner could not be said to be arbitrary, but in accordance with law.
7. After hearing learned counsel for the parties, the Court has perused the records.
8. It is not in dispute that at the time of interception of goods, no document, whatsoever, was available. Only after passing of the seizure order, documents were produced. The stand taken by the petitioner was that the goods sent for weighment within 20 kms. therefore, no e-way bill or documents were required, cannot be accepted. Delivery challan was required to be accompanied the goods, but the same was produce after seizure of the goods.
9. The finding of fact has been recorded that at the time of interception and seizure, no document was adduced as prescribed under the GST Act and in absence of any prescribed document available at the time of detention/seizure, the action taken against the petitioner cannot be said to be illegal.
10. If the argument of the petitioner is accepted that for sending the goods for weighment, no specified documents are required to be accompanied with the goods during transit, then it will provide a handle to produce the documents at a later stage of interception/seizure and to take shelter that the goods were sent for weighment, which in turn will frustrate the very purpose of section 129, read with Rules 138, of the Act.
11. In view of the aforesaid facts & circumstances of the case, no interference is called for in the impugned orders.
12. The writ petitions lack merit and the same are hereby dismissed.
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