GST: A mismatch in quantity found during roadside inspection cannot be considered a violation of Section 129
Facts of the case
Petitioner was engaged in business of copper wires and copper scraps, which are purchased from the dealers located throughout the country and he is registered under Delhi GST Act, 2017/Central GST Act, 2017.The petitioner claims that in the ordinary course of business, he sold copper scraps to M/s R.N.T. Metals Pvt. Ltd., Bhiwadi (Rajasthan) for an amount of Rs.83,69,594/- (including IGST @ 18%) While in transit , the goods were intercepted by GST authorities at Manesar on 27thNov,2021 and sought e-way bill as well as invoice. However the vehicle carrying goods was ordered to be stationed date i.e., 03.12.2021, respondent No.4 issued Order of Detention under Section 129(1) of the Act in Form GST MOV-06 (Annexure P-14) stating that there was mismatch of 90.7kgs between actual quantity of goods vis-à-vis that stated in invoice and e-way bill.
Observation of the court
Thereafter, a notice in form GST MOV-07 was issued to petitioner alleging intent to evade tax due to short payment of tax of RS 11000 The petitioner filed the present writ petition claiming that the proceedings under Section 129 of the Act against him are without jurisdiction and thus deserve to be quashed.
The High court relied upon the decision of M/s . Shiv Enterprises vs. State of Punjab and others
..The alleged ‘intent to evade tax’ must have a direct nexus with the activity of trader. The opinion formed by the authorities must reflect such nexus before proceeding under Section 130 of 2017 Act. A trader cannot be accused of having intention to evade payment of tax for act or omission on part of a person not immediately linked to his activity. Learned counsel for the State agreed that even if a trader wants to be prudent, there is no system in place from where he can check as to whether his predecessors in supply chain have paid input tax credit or not. Meaning thereby, it is virtually impossible for a trader to ascertain as to whether input tax has been paid by his predecessors or not and it is for this reason also that the claim to input tax credit has been made subject to scrutiny and assessment. It is the fundamental legal principle embedded in legal maxim “LEX NON COGIT AD IMPOSSIBILIA”-That the law does not compel a man to do that which he cannot possibly perform”. Once a person cannot be compelled to do something not possible, definitely he cannot be penalized for not doing so.”
From perusal of the e-Invoice (Annexure P-4/A) it is clear that quantity of consigned goods is shown to be 10430.7 kilograms. An amount of Rs.1276717.68/- has been paid as tax on the consignment whereas as per the State, it was 10520 kilograms. The said difference in weight is less than 1%. As per State, the alleged evasion shall not be more than Rs.11000/-.
The Writ petition was allowed in favour of petitioner. Also , where difference in quantity stated in e-way bill and actual quantity was less than 1% by any stretch of imagination it cannot be regarded as intent to evade tax and intial proceeding u/s 129 of CGST Act ,2017.Raghav-Metals-Vs-State-of-Haryana-and-others-Punjab-and-Haryana-High-Court