The Single Bench of Justice Bibek Chaudhuri of the Calcutta High Court in the case of Ashok and Sons (HUF) Vs Joint Commissioner, State Tax, Office of the Senior Joint Commissioner, Siliguri Circle & Ors held that Section 129 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “GST Act”) empowers the statutory authority to detain the vehicle and seize the goods. The goods shall be released only on payment of a penalty equal to 200% of the tax payable on such goods.
Brief Facts:
The Petitioner is the manufacturer and supplier of the milestone Bitumen Emulsion and Allied products and is registered under the GST Act. During the course of business, the Petitioner supplied 31,600 Kgs of Bitumen Emulsion along with the invoice generating a proper E- way bill. The Petitioner paid IGST at a rate of 18% for the transportation of the said product. However, during the course of transportation, the good carriages suffered a breakdown and thereafter, it was detained in a motor vehicle garage. Upon intercepting the vehicle, the State Tax Officer discovered that the E-Way bill for the consignment had expired. The Assistant Commissioner, Bureau of Investigation Headquarters then imposed SGST and requested that the Petitioner pay the aforementioned tax along with the penalty. The Petitioner had to pay the tax and release the car but preferred an appeal which got dismissed.
Contentions of the Petitioner:
It was contended that the Petitioner had no intention to evade the tax. He paid the IGST tax and the mechanical error was not in the control of the Petitioner. Therefore, under such circumstances, the Respondent authority could not impose any SGST and fine on the ground that the E-Way bill had expired.
It was further contended that the GST is a destination-based tax, meaning that goods and services are taxed where they are used rather than at their origin or while they are being transported. Therefore, the authority to collect IGST will lie with the state in which they are consumed. The Petitioner didn't cheat the system. The Petitioner was not required to pay any tax because the vehicle was unable to leave the State of West Bengal's territory due to a breakdown.
Contentions of the Respondent:
It was contended that the GST Act presumes that the aforementioned items were delivered inside the state's borders if a vehicle carrying a specific consignment is discovered to be in the required condition for this and the Petitioner’s consignment was lying inside the territory for more than 3 days. It was also contended that they had ample amount of opportunity to extend the validity of the E-Way bill however, they didn’t take any step toward the extension of the E-Way bill. Therefore, Section 129 of the GST Act empowers the authority to impose taxes and penalties.
Observations of the Court:
The Hon’ble Court stated that the GST Act gives the statutory body the right to stop the vehicle and confiscate the goods under Section 129. The only way to release the goods is to pay a penalty equal to 200% of the tax due on the commodities.
It was observed that the items were discovered to be impounded on State territory and the Respondent Body was legally entitled to impose penalties under Section 129 and the SGST.
The Decision of the Court:
Based on the aforementioned reasons, the writ petition was accordingly dismissed.
Case Title: Ashok and Sons (HUF) Vs Joint Commissioner, State Tax, Office of the Senior Joint Commissioner, Siliguri Circle & Ors
Coram: Hon’ble Mr. Justice Bibek Chaudhuri
Case No: WPA 190 of 2023
Advocates for the Petitioner: Mr. Jagriti Mishra, Adv., Mr. Subham Gupta, Adv., Mr. Debayan Goswami, Adv., Mr. Reshab Kumar, Adv.
Advocates for the Respondent: Mr. Subir Kumar Saha, Adv., Mr. Bikramaditya Ghosh, Adv.
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