India Logistics And Cargo Movers Vs The State of Gujarat (Gujarat High Court)
It was incumbent upon the GST Department to give reasons in support of their conclusion that the goods in question and the conveyance are required to be confiscated. However, the impugned order is totally bereft of any reasons, in the absence of which the order stands vitiated due to non- application of mind on the part of the maker of the order. The impugned order dated 28.5.2019, therefore, cannot be sustained. Since the court is inclined to set aside the impugned order on the ground that it is a non-speaking order, ordinarily, it would remand the matter to the authority to decide the same afresh by assigning proper reasons. However, in the facts of the present case, the third respondent has filed an affidavit-in-reply which has been extensively referred to hereinabove. As discussed earlier, on the grounds set forth in the affidavit-in-reply, the goods in question could not have been confiscated. Under the circumstances, no useful purpose would be served in remanding the matter to the third respondent.
For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 28.5.2019 passed by the third respondent in exercise of powers under section 130 of the CGST Act/GGST Act is hereby quashed and set aside. The respondents are directed to forthwith release the conveyance, namely, truck No.GJ-27-X-3752 along with the goods contained therein. Rule is made absolute accordingly.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. Rule. Ms. Maithili Mehta, learned Assistant Government Pleader waives service of notice of rule on behalf of the respondents.
2. Having regard to the controversy involved in the present petition and with the consent of the learned advocates for the respective parties, the matter was taken up for final hearing.
3. By this petition under article 226 of the Constitution of India, the petitioner has challenged the notice dated 16.5.2019 issued in Form GST MOV-10 (Annexure-A) as well as the detention/confiscation order dated 16.5.2019/28.5.2019 issued by the third respondent in Form GST MOV-11 and seeks a direction to the respondent authorities to forthwith release truck No.GJ-27-X-3752 along with the goods contained therein.
4. The facts stated briefly are that the petitioner, a sole proprietorship firm, which is inter alia engaged in the business of transport, procured about 61 different customers. On 16.5.2019 at 13:50 hours while the goods were in transit in vehicle No.GJ-27-X-3752, the third respondent – State Tax Officer, Mobile Squad, Enforcement, Division-2, Ahmedabad intercepted the vehicle at Narol Char Rasta and found that the e-way bills of three parties, namely, Anjani Synthetics Limited dated 30.4.2019, Neelam Fabrics dated 15.5.2019 and Bhansali Cotfab dated 16.5.2019 were not generated. The statement of the driver in charge of the vehicle came to be recorded in Form GST MOV-1. It appears that the goods in respect of 58 customers wherein there were valid e-way bills came to be released; however, the vehicle with the goods in respect of the above three parties came to be detained on the spot on 16.5.2019 by issuing a notice in Form GST MOV -10 under section 130 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) as well as the Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the “GGST Act”). [Both the above Acts together are hereinafter referred to as the “GST Acts”]. It appears that the petitioner provided justification for not generating the above mentioned e-way bills; however, there was no response from the respondents. It further appears that the petitioner agreed to pay the tax and penalty as calculated on the basis of transaction value in the invoice as envisaged under section 129 of the GST Acts. However, the second respondent passed an order dated 28.5.2019 increasing the value of goods by 20% and confiscating the goods under section 130 of the GST Acts. Being aggrieved by the continued detention/seizure of its goods, the petitioner has filed the present writ petition seeking the reliefs noted hereinabove.
5. Mr. Manasvi Thapar, learned advocate for the petitioner, submitted that the continued detention/seizure of the goods and vehicle of the petitioner, despite the petitioner having agreed to pay tax and penalty as stipulated under section 129 of the GST Acts, is wholly without jurisdiction, arbitrary and illegal. It was submitted that section 129(1) of the GST Acts clearly provides for release of any goods detained/seized under the section on payment of applicable tax and penalty equal to hundred percent. Therefore, non-release of the goods detained despite the petitioner having shown willingness to make such payment is wholly without jurisdiction, arbitrary and illegal. It was further submitted that the confiscation notice has directly been issued on 21.5.2019 in purported exercise of powers under section 130 of the GST Acts without completing the procedure under section 129 thereof and thereafter the third respondent has proceeded to pass the impugned order of confiscation dated 28.5.2019, which is wholly without
jurisdiction and illegal.
5.1 It was further submitted that the impugned order of confiscation is pre-determined and without application of mind. It was urged that while admittedly the notice for confiscation is dated 16.5.2019, it was served upon the petitioner on 21.5.2019 and that despite the petitioner having made submissions objecting to the confiscation, in the impugned order of confiscation, it has been recorded that the petitioner has not filed any objections. It was submitted that this indicates that the impugned order has been passed in a pre- determined manner without application of mind and therefore also, the same is arbitrary and illegal is required to be set aside. It was further submitted that the goods were duly accompanied by tax invoice as well as transport receipt and only e-way bills of the above three customers could not be generated by the petitioner due to reasons which have been stated before the respondent authorities. It was submitted that there was no intention on the part of the petitioner to evade payment of tax under the GST Acts and hence, the continued detention of the goods and the truck is arbitrary and illegal. It was accordingly, urged that the impugned order of confiscation deserves to be quashed and set aside and that the respondents are required to be directed to release the goods as well as the conveyance.
6. Opposing the petition, Ms. Maithili Mehta, learned Assistant Government Pleader, placed reliance upon the averments made in the affidavit-in-reply filed on behalf of the third respondent wherein it is stated that the vehicle in question was confiscated on 16.5.2019 directly in exercise of powers under section 130 of the Goods and Services Tax Act, 2017. The ground for confiscation of the said vehicle was that qua three e-way bills, Part-B was not found from the vehicle, meaning thereby, out of 61 consolidated e-way bills, Part-B was only for 58 consignments and Part-B of e-way bills of three consignments was not traceable. It is further submitted that the authorities could find invoices qua all 61 consignments but out of those 61 invoices, 14 invoices were quite doubtful as they did not bear the signatures of the authorized persons issuing the said invoices. [The details of the 14 invoices are set out in the affidavit-in-reply.] It was submitted that the authorities have, therefore, presumed that the said invoices are fake and are drawn with an intention to evade tax.
6.1 It is further submitted that the earlier representation dated 20.5.2019 was given by the petitioner who is the transporter and that neither the purchaser nor the suppliers have given any explanation in respect of the 14 invoices which do not bear any signature and that the explanations dated 20.5.2019 and 28.5.2019 are mainly qua non-possession of Part-B of the e-way bill. It is categorically averred in the affidavit-in-reply that mainly due to the fact that 14 invoices were not properly signed, the authorities have exercised powers under section 130 of the Goods and Services Tax Act, 2017 and calculated tax and penalty considering the provisions of section 130 of the Goods and Services Tax Act, 2017. The learned Assistant Government Pleader accordingly, urged that the authorities have duly followed the provisions of law and having found serious irregularities, have passed the order of confiscation under section 130 of the Goods and Services Tax Act, 2017 which is just legal and proper. It was accordingly, urged that the petition being devoid of merits deserves to be dismissed.
7. In the backdrop of the facts and contentions noted hereinabove, it is an admitted position that in this case no detention order under section 129 of the CGST Act/GGST Act has been made in this case and the respondents have directly resorted to the provisions of confiscation under section 130 of the said Acts.
8. A perusal of the notice dated 16.5.2019 issued under section 130 of the CGST Act/GGST Act whereby the third respondent proposes to confiscate the goods and conveyance, reveals that the vehicle in question was intercepted in exercise of powers under sub-section (3) of section 68 of the CGST Act/ GGST Act as well as other statutory provisions and it was found that certain discrepancies as reproduced hereunder were noticed:
“(i) After verification of documents, tendered during the movement of goods in vehicle, valid e-way bill not generated for the following bills.
a. Anjani Synthetic Limited bill no.F.1286/1920 dated:30.04.2019
b. Neelam Fabrics bill no.55 dated 15.05.2019
c. Bhansali Cotfab bill no.211 dated 16.05.2019
(ii) Transporter is aware about consolidated e-way bill as he has generated the same for 58 transactions of which goods transported through the same truck, while he has not included above mentioned 3 transaction in that consolidated e-way bill. In addition to that documents tendered for the goods in movement there are 14 bill of supply found without authorized signature and no clarification received from taxable persons. So those invoices are not valid invoices because not bearing signatures of suppliers.
(iii) With reference to bill of M/s. Anjani Synthetics Ltd. Dated;30.04.2019, submitted that the goods was sent to transporter with bill of supply and e-way bill part – A on 30.04.2019, but confirmation was not received from recipient, so the goods was stored in godown of transporter till 16.05.2019 after receiving the confirmation goods was dispatched. But he has not provided any proof for supporting his submission. Also transporter has not included the same transaction in his consolidated e-way bill. So, it is presumed that he is also involved in evasion of the tax for the above bill.
(iv) The documents tendered for the transactions mentioned in (i) are not valid according to sec.68 of GGST Act, 2017 as there is no signature of authorized person.
(v) As per the above detail it is clear that taxable persons are evading tax by not generating e-way bill part-B.
(vi) No supplier came forward for the clarification for not generating e-way bill part-B and about bill of supply without authorized signature.
(vii) Value of goods are increased by 20% for the calculation of tax, penalty and fine u/s.130.”
9. By the said notice, the petitioner was called upon to appear before the third respondent by 27.5.2019. It is the case of the petitioner that the notice dated 16.5.2019 was served upon it on 21.5.2019. It appears that in the meanwhile, the petitioner, by a communication dated 20.5.2019, requested the respondent to release the goods in respect of which there was no dispute, pursuant to which, the goods pertaining to 58 parties appear to have been released. The petitioner by a separate communication of the same date also offered explanations in respect of the goods of the three parties in respect of which disputes were raised. By a communication dated 21.5.2019 one of the three parties, viz., Anjani Synthetics Limited, tendered its explanation for the deficiencies pointed out by the third respondent.
10. Thereafter, by the impugned order dated 28.5.2019, the following goods and conveyance came to be confiscated by the third respondent in exercise of powers vested under section 130 of the CGST Act/GGST Act and other statutory provisions whereby tax, penalty and fine in lieu of confiscation of goods and conveyance came to be imposed:
DETAILS OF GOODS CONFISCATED
