When e-way Bill & Tax Invoice is proper, then Section 129 (Detention, Seizure and Release of Goods & Conveyances in Transit) cannot be invoked
Fact of the case
There are two petitioner in the case. The first petitioner is a manufacturer of “Ground Betel Nuts (Arecanuts)” with the brand name “Roja”. The second petitioner is a registered dealer of that product. The first petitioner is an assessee registered under the Goods and Services Tax Act (“GST Act”), in Tamil Nadu; so is the second petitioner on the roles of the third respondent.
The first petitioner consigned a load of Roja betel nut to the second petitioner, through the Exhibit P9 tax invoice, dated 22.09.2018. It entrusted the consignment to the ABT Parcel Service for transportation. Indeed, in the Exhibit P9 invoice, the first petitioner described the commodity with “HSN 0802”, and paid the tax at 5%. The first petitioner also raised the Exhibit P10 e-way bill. W.P.(C) No. 32324/2018. On 26.09.2018, the Assistant State Tax Officer (ASTO), the fourth respondent, intercepted the lorry when it reached Palakkad. The lorry had been carrying other goods, too. The ASTO detained the goods, alleging that the first petitioner’s product fits the description “HSN 2106” and attracts 18% tax–not 5%. In other words, the ASTO detained the goods because the petitioners had allegedly been trying to evade tax by misdescribing the product. Served with the Exhibit P11 detention notice, dated 26.09.2018, the petitioners’ authorised representative met the ASTO and explained about the genuineness of the transport. He tried to impress upon the authority that there was neither misclassification nor evasion of tax. But the ASTO remained unconvinced. Aggrieved, the petitioners filed this Writ petition.
Issue of the case
The issue raised in the above case is when e way bill and tax invoice is raised properly by taxpayer than will section 129 of the CGST act i.e. Provision relating to Detention, Seizure and Release of Goods & Conveyances in Transit can be invoked.
Observation by court
The Court has held that the process of manufacture employed by the appellant company did not change the nature of the end product: “The betel nut remains a betel nut”. Sri Mather has also produced literature before the Court, besides the brochures of supari producers, to underline what supari is and how it differs from mere betel nut powder or granules.
In somewhat an analogous situation as faced, Rams held that the inspecting authority may entertain a suspicion that there is an attempt to evade tax. But if the records seized truly reflect the transaction and the assessee’s explanation accords with his past conduct, for example, the returns he has filed earlier, the detention is not the answer. In the words of Rams, at best the inspecting authority can alert the assessing authority to initiate the proceedings “for assessment of any alleged sale, at which the petitioner will have all his opportunities to put forward his pleas on law and on fact.” Indeed, emphatic is the enunciation of law in Rams that the process of detention of the goods cannot be resorted to when the dispute is bona fide, especially, concerning the eligibility of tax and, more particularly, the rate of that tax.
However, the court has clarified it has not given any judicial approval to the petitioners’ with regards to the classification of goods or the HSN Code they have applied. The Revenue is at liberty to initiate appropriate proceedings if they deem it fit on the issue of alleged misclassification and the rate of tax.
Read the Judgement Order from Below LinkWhen-e-way-Bill-Tax-Invoice-is-proper-then-Sec.129-Detention-Seizure-and-Release-of-Goods-Conveyances-in-Transit-cannot-be-invoked