Facts of the case
- A registered seller sold 300 bags of Pan Masala worth Rs. 33,81,000/- to a dealer in Meghalaya and generated a tax invoice under the IGST Act, charging 28% IGST and 60% Cess.
- The goods were handed over to a transport company for delivery to Meghalaya, but the truck was allegedly used to transport fruits and vegetables to West Bengal by a different logistics company, and the journey had already started before the goods were loaded.
- The vehicle was used to transport rice to Bihar on 12.04.2018, returned to Delhi on 17.04.2018, and was then used to transport Pan Masala by the petitioner starting on 17/18.04.2018.
- However, the goods were seized by the Mobile Squad in Kanpur on 18.04.2018 at 3.42 P.M.
- When the goods were intercepted, the driver presented the tax invoice and bility.
- The goods were detained, and on 01.05.2018, a seizure order was issued, imposing a penalty of Rs.33,81,000/- and additional tax and Cess of Rs.9,46,680/- and Rs.20,28,600/- respectively, totalling Rs.63,56,280/-.
Issues before the court
A writ petition has been filed to challenge the order passed under Section 129(3) of the U.P. Goods and Service Tax Act, 2017. The court will not interfere with the conclusion drawn by the tax authorities after the goods were intercepted.
Contention of the petitioner
- The petitioner argues that the taxing authorities made a mistake by passing the impugned order, as all necessary documents, such as the tax invoice, bility, and E-way Bill, were present when the goods were intercepted. The E-Way Bill was generated on 08.04.2018, and the vehicle number was mentioned.
- The petitioner also contended that there was no requirement to cancel the E-Way Bill in this case. The goods were loaded and dispatched on the intervening night of 17/18.04.2018, and there was no tax evasion by the petitioner.
- The petitioner challenges the finding of the Appellate Authority.
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Contentions of the respondent
- The State Counsel argues that Rule 138(9) of the Central Goods and Service Tax Rules, 2017 clearly states that if goods are not transported as per the details furnished in the E-Way Bill, it should be cancelled electronically within 24 hours of generation.
- They contended that the petitioner should have cancelled the E-Way Bill if the vehicle was not made available by the transporter.
- The State Counsel points out that there were multiple transactions made on the strength of the tax invoice, bility, and E-Way Bill generated on 08.04.2018 through vehicle number NL01N/6504.
- The State Counsel also mentions that the purchasing dealer did not come forward to provide any explanation after the goods were intercepted and the vehicle was detained.
Analysis of the judgement
- This case involves the interception and detention of the petitioner’s goods by the taxing authorities, who issued a notice to both the selling and purchasing dealers. No reply was received, and a seizure order was passed imposing penalties and taxes.
- Both parties admit that the E-Way Bill was generated on 08.04.2018 with the vehicle number NL01N/6504 and the name of the transporter M/s Bombay Kandla Transport Pvt. Ltd. for transporting the goods to Meghalaya. However, at the time of interception, the driver only produced the tax invoice and transporter bill.
- The petitioner’s case is not acceptable as the truck was not only used by Bombay Kandla Transport Pvt. Ltd. for transporting goods to Meghalaya but also by other logistics companies for sending fruits and vegetables to Panchkula and rice to Darbhanga. The authorities have rightfully denied the petitioner’s case.
- The State Counsel argues that the petitioner had made several transactions using the same tax invoice and EWay Bill generated on 08.04.2018 and evaded tax. They also claim that the alleged transaction of rice to Darbhanga was denied by the firm as it had already closed down two months prior to the transaction. The chart provided in the counter affidavit reflects the movement of the vehicle through various Toll Plazas and establishes that several trips were made from Delhi to other places using the same document and vehicle.
- The court finds that the dealer has misused the statutory provisions of the Act and Rules, and the inference drawn by the taxing authorities after intercepting the goods on 18.04.2018 is valid and does not require any interference by the court.
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