H.R. Enterprises vs State Of Rajasthan
2021 Latest Caselaw 8691 Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 5266/2021

1. H.R. Enterprises, H26 (F/G/H), Marudhar Industrial Area, Phase 2nd Basni, Jodhpur Through Its Propritor Mohammed Asif Ghouri S/o Abdul Rahman, Aged About 40 Years, Resident Of 99, Kamla Nehru Nagar, Near Chirghar Masjid, Jodhpur.

2. Gurpreet Singh S/o Suba Singh, Aged About 36 Years, Kolkapura, Faridkot, Punjab, Being The Driver/person Incharge Of Vehicle No.PB04-V-8310.

----Petitioners Versus

1. State Of Rajasthan, Through The Commissioner Of State Tax, RGST, Kar Bhawan, Ambedkar Circle, Bhawani Singh Road, C-Scheme, Jaipur.

2. Assistant Commissioner, State Tax (GST), Ward-II, Circle Anti Evasion, Sri Ganganagar.

                                                                  ----Respondents


For Petitioner(s)          :     Mr. Sharad Kothari
For Respondent(s)          :     Mr. Sunil Bhandari



                      JUSTICE DINESH MEHTA

                                      Order

01/04/2021

1. By way of the present writ petition, petitioners have

challenged order of detention dated 18.03.2021 and the very

jurisdiction of respondent No.2 to proceed in the matter.

2. Learned counsel for the petitioners submits that consignment

in question (34.120 MT of MS Scrap), belonging to petitioner No.1,

which was being transported by petitioners vide G.R. No.6411

dated 10.03.2021 of Amritsar Gobindgarh Roadways in Vehicle No.

(2 of 10) [CW-5266/2021]

PB 04-V-8310, was having all requisite/prescribed documents

while in transit.

3. When the respondent No.2 intercepted the goods on

11.03.2021 at 02.30 pm, all the documents prescribed under law,

such as Invoice No.194 dated 10.03.2021; G.No.6411 dated

10.03.2021; E-Way Bill No.741179867941; Weigh Slip; Tax

Invoice No.183 dated 10.03.2021 of Marwar Steels etc. were

furnished, yet he did not allow the petitioner to move.

4. Mr. Sharad Kothari invites Court's attention towards the

documents placed on record and highlights that in spite of the fact

that the requisite documents were produced before the

respondent No.2 on 11.03.2021 itself, he firstly directed the

petitioner No.2 to remain stationed with the vehicle and goods

loaded therein for the purpose of physical verification. He firstly

issued notice in MOV-2 and, thereafter on 15.03.2021, got

extension to complete inspection from the competent authority,

simply with a view to conduct inquiry relating to alleged wrongful

availment of input tax credit.

5. It is the argument of the petitioners that such fishing and

rowing inquiry in relation to availment of input tax credit and

suspicion about the purchase transaction is not within the domain

of respondent No.2, while exercising powers under Section 68 of

the CGST Act, 2017 (for short, 'the Act of 2017') while goods are

in movement. It is argued by learned counsel for the petitioners

that such inquiry, if at all, is necessary, the same is permissible to

be done by regular Assessing Officer and not by the Anti Evasion

Officer or any check-post incharge or flying squad.

6. While emphasizing that not only the detention, even the

inquiry sought to be undertaken by the respondent No.2, is

(3 of 10) [CW-5266/2021]

without jurisdiction, learned counsel for the petitioners points out

petitioners' predicament that for getting release of vehicle and

goods, provisions of Section 129 of the Act of 2017 read with

Rules 140 and 141 of the Goods and Service Tax Rules, 2017 (for

short, 'the Rules of 2017') require payment of tax and penalty or

furnishing of a bank guarantee equal to the amount of applicable

tax and penalty. He argues that in the facts of the present case, if

the petitioners are required to pay the proposed amount or to

furnish bank guarantee, it would adversely affect business rights

of petitioner No.1 inasmuch as, final amount is yet to be

adjudicated and the proposed penalty is to the tune of

Rs.10,74,780/- (50% of the value of goods) apart from tax of

Rs.1,93,460/-.

7. Learned counsel invites Court's attention towards the circular

dated 10.04.2018, issued by the Central Board of Indirect Taxes

and Customs and submits that an officer empowered to intercept

and inspect a conveyance, is only required to verify prescribed

documents and where prima-facie no discrepancies are found, he

is required to allow the goods to move further. It is argued by Mr.

Kothari that the respondent No.2 has neither understood the

import and purport of the provisions of Sections 68 & 129 of the

Act nor has he adhered to the mandate of the circular, which is

binding upon him.

8. Mr. Bhandari, learned counsel for the respondents, on the

other hand, submits that the petitioners have directly rushed to

this Court without even filing reply before the respondent No.2. It

is argued that the petitioners could have applied for release of the

goods as provided under Sections 67, 68 and 129(1) of the Act of

2017, instead of invoking writ jurisdiction of this Court. He further

(4 of 10) [CW-5266/2021]

argues that as an efficacious alternative remedy of preferring an

appeal against the detention order is available to the petitioners,

instant writ petition is not maintainable.

9. Learned counsel places heavy reliance upon the judgment

dated 22.11.2019, passed by Hon'ble the Supreme Court in the

case of State of Uttar Pradesh & Ors. Vs. M/s. Kay Pan Fragrance

Pvt. Ltd. [Civil Appeal No.8941/2019] and argues with equal

vehemence that Hon'ble the Supreme Court has clearly held that

the High Court should not interfere and issue order(s) of release of

the vehicles/goods and in appropriate case, it should direct the

concerned petitioner to furnish security as provided under Rules

140 and 141 of the Rules of 2017.

10. Learned counsel further relies upon orders dated 15.03.2019

[M/s. Amit Traders Sangariya Vs. State & Ors. : SBCWP

No.2055/2019), 05.02.2020 (M/s. Govindwal Sahib Vanaspati

Mills : SBCWP No.48/2020); and 03.03.2021 (Leeladhar Meghwal

& Anr. Vs. The Asstt. Commissioner State Commercial Taxes :

SBCWP No.2672/2021) passed by this Court and judgment of

Gujarat High Court dated 06.11.2020, rendered in the case of

Majid Bilalbhai Akbani Vs. State of Gujarat (Special Civil

Application No.12754/2020) to contend that in all similar cases,

the Courts have either refused to interfere or has required the

concerned petitioner to furnish bank guarantee in accordance with

Rules 140 and 141 of the Rules of 2017.

11. During the course of arguments, Mr. Bhandari adverts to the

provisions contained in Section 129 of the Act of 2017 and argues

that on finding any violation of the provisions of the Act of 2017,

the respondent No.2 is empowered to conduct inquiry and assess

the tax/penalty.

(5 of 10) [CW-5266/2021]

12. Learned counsel cites a judgment of Hon'ble the Supreme

Court in the case of State of U.P. & Ors. Vs. Ram Sukhi Devi [2005

SCC (L&S) 560] to argue that this Court cannot direct release of

the goods/vehicles and grant final relief at the interim stage.

13. Having heard learned counsel for the parties, this Court is of

prima facie view that the provisions of Sections 67, 68 and 129 of

the Act of 2017 are required to be interpreted. The circular dated

13.04.2018, issued by the Central Board of Indirect Taxes and

Customs though addresses the hardship being faced by the

trade/industry on account of incorrect interpretation, if not

misuse/abuse of the provisions of Sections 67/68 & 129 of the Act

of 2017 and lays down guidelines for inspection and release of the

goods in transit, but the same has not been adhered to by the

respondent No.2.

14. As is evident in the present case, if a Check Post Officer or

Anti Evasion Officer intercepting the goods and vehicle while in

transit, is permitted to carry on such fishing and rowing inquiry, it

would impede, rather retard free flow of trade resulting in

unnecessary and unwarranted harassment to the carrier of goods,

so also to the consignor/consignee.

15. Upon perusal of detention memo (Annex.8), so also Physical

Verification Report (Annex.R/4), this Court finds that it is an

admitted case of the respondent No.2 that all the documents

prescribed under law were available and goods, including its

weight, was found in order. Even, genuineness of the goods in

transit per se is not in dispute inasmuch as, documents and e-way

bill/other documents in relation to transit depicting the goods to

be 34.120 tons of MS Scrap in quantity and the nature of goods

on physical examination was found to be in accord.

(6 of 10) [CW-5266/2021]

16. In preliminary opinion of this Court, once the goods in

question are in conformity with the documents of transit, the

scope of inquiry under Section 68 of the Act of 2017 by Anti

Evasion Officer/ Check Post Officer or flying squad ends. He

cannot kick start an inquiry relating to the geuineness of purchase

and corresponding input tax credit, which essentially relates to

purchase of goods.

17. No satisfactory reason has surfaced justifying the inquiry

being conducted by respondent No.2. Complete report of the

jurisdictional assessing authority, as mentioned in Annex.7, is not

on record.

18. Mr. Bhandari's contention that the enquiry being undertaken

by the respondent No.2 is permissible as per the provisions of

Section 129 (1) of the Act of 2017, on a deeper scrutiny turns out

to be not as palatable as has been projected. Because, sub-

section (1) uses the expression "where any person transports any

goods or stores any goods while they are in transit in

contravention of the provisions of this Act or the rules.........". The

language used in sub-section (1) of Section 129 of the Act of 2017

is indicative of the position that the goods in transit or under

stock, which are in transit themselves must be subject matter of

violation/contravention of the statutory provision.

19. As far as applicable tax on the goods under consideration is

concerned, the same has admittedly been appropriately charged

and the goods and vehicle in transit are accompanied with the

prescribed documents. Thus, in the prima-facie opinion of this

Court, provision of Section 129 cannot be resorted to. It is

moreso, when the allegation is, that the seller/consigner is

seeking to avail wrong input tax credit. The incident or occasion of

(7 of 10) [CW-5266/2021]

availing input tax credit is an event preceding the transaction in

question and completely divorced from the movement/transit in

question, which is in pursuance of inter-state sale from Jodhpur to

Mandi Gobindgarh; transacting parties are different - H.R.

Enterprises (Petitioner No.1) and Devbhoomi Castings (P) Ltd.

20. So far as judgment of Hon'ble the Supreme Court in case of

M/s Kay Pan Fragrance (supra) is concerned, in the opinion of this

Court, Hon'ble the Supreme Court passed the order dated

22.11.2019, having regard to the fact that various interim orders

were passed by Allahabad High Court releasing the goods on

furnishing of the solvent security and the writ petitions were

thereafter disposed of as having rendered infructuous, without

there being any adjudication on merit.

21. Moving on to the final orders passed by Coordinate Benches

of this Court requiring the concerned petitioners to furnish bank

guarantee have also been placed for perusal of this Court; upon

perusal of the same, this Court finds that neither the jurisdiction

of the respondent - authority nor the question relating to scope of

powers of the empowered officer while goods in transit was

brought for consideration of the Court.

22. Adverting to the final judgment dated 05.02.2020 in the case

of M/s. Govindwal Sahib Vanaspati Mills (supra), suffice it to

mention that this Court, upon perusal of the record and reply,

recorded a categorical finding of evasion of tax and discrepancy in

the documents, whereas, such is not the position, when it comes

to the case in hands.

23. Mr. Sunil Bhandari, learned counsel requests that instead of

passing interim order, the petition itself be decided. Record of

proceedings reveals that when this petition, which was filed on

(8 of 10) [CW-5266/2021]

23.03.2021, came up for motion hearing on 24.03.2021, a

Coordinate Bench of this Court directed the matter to be listed on

01.04.2021 (today). No notices have yet been issued. That

apart, final decision of the case will require a rather thorough

examination of facts and law and indepth deliberation.

24. Both the learned counsel have cited host of judgments, but

none of them deal with the scope of provisions under

consideration. The scope of provisions of Sections 67/68 & 129 of

the Act, in the light of the facts like the ones at hands, has

perhaps not been examined by any Constitutional Court. The

assessees and the authorities under CGST/SGST/IGST are giving

their own interpretation of the provisions of the Act relating to

Goods in Transit.

25. All stake holders are trading in the new GST regime with

uncertainties as the path is comparatively unfamilier, unmarked

and unpaved. The parameters of the authorities' powers and

dealers' duties/responsibilities/liabilities are yet to be demarcated.

26. Notice dated 18.03.2021 (Annex.9) is an example of such

uncertainty. A perusal of the said notice issued in MOV-07 shows

that respondent No.2 has jumped to propose penalty under clause

(b) of Section 129(1)(a) on the pretext that as per petitioner

No.2, no-one has appeared for the owner of goods and proposed

penalty as high as 50% of the value of goods. As against this, he

was firstly required to propose penalty under clause (a) of Section

129(1), which would have been equal to the amount of tax. Given

that the penalty under clause (a) would have been Rs.1,93,460/-

and proposed penalty under clause (b) is Rs.10,74,780/-, in the

opinion of this Court, the statutory remedies will be inefficacious.

(9 of 10) [CW-5266/2021]

Even, remedy relating to release of goods under Section 129(1)(c)

of the Act of 2017 would be illusory.

27. Hence, issue notice. Issue notice of stay application also.

28. Mr. Sunil Bhandari accepts notices on behalf of the

respondents and prays for two weeks' time to place on record the

original report and documents sent by the jurisdictional assessing

officer.

29. Having regard to the fact that goods and vehicle are lying

stationed/detained with the respondent No.2 since 11.03.2021;

inspection and physical verification of the goods including its

weight has already been done. Hence, goods and vehicle are not

required, at least for the purpose of inquiry. If they are detained

for indefinite period, the condition of stationary truck with weight

of 38.120 MT on its tyres, and loss of business of hopeless driver

will be irreversible. Besides this, the kind of interim order, which

this Court proposes to pass, would not amount to final relief,

hence, the judgment cited by learned counsel for the respondents

does not apply in the facts of the present case.

30. In view of what has been stated hereinabove and in the

interest of justice it is deemed expedient and hence, respondent

No.2 is directed to release the goods and vehicle in question

forthwith, in case petitioner No.1 furnishes two solvent sureties to

the tune of Rs.15 lakhs executed by dealers registered in the

State of Rajasthan. He shall not insist upon furnishing of bank

guarantee or cash security.

31. The petitioner No.1 shall further be required to file an

undertaking before this Court that in the event of dismissal of the

writ petition and/or upon final determination of liability (if any),

(10 of 10) [CW-5266/2021]

subject of course to their rights of availing appropriate remedies,

the amount would be paid.

32. The case be listed on 19.04.2021.

(DINESH MEHTA),J

61-skm/-

Powered by TCPDF (www.tcpdf.org)