The Kerala High Court while upholding the detention of the consignment by the authorities held that the E-way Bill and Delivery Challan necessary for Interstate delivery of exempted goods under GST.
The petitioner, Mohammad Sherref who is a purchaser of turmeric from an agriculturist in Karnataka, has approached against detention of a consignment in transit.
The consignment was being transported under cover of an invoice generated by the petitioner in his capacity as purchaser of the goods, which showed the goods as attracting tax on a reverse charge basis, and an e-way bill which reflected that the consignment was, as such, exempted from tax.
The vehicle and the goods were detained, and notice in FORM GST MOV-7 was issued to the petitioner wherein the objection was essentially with regard to the non-registration of the person making the interstate supply, as also the fact that the purchase bill issued by the petitioner was not a valid document for the purposes of supporting an interstate taxable supply.
The petitioner contends that, while the consignor agriculturist is not required to take any registration in view of the express provisions of Section 23(1)(b) of the Act, he is also not required to take compulsory registration under Section 24, since the non-obstante clause in Section 24 does not apply to agriculturists mentioned under Section 23.
It was further contended that while the e-way bill clearly indicated that the goods were exempted goods, being turmeric bulbs and turmeric, even if the respondents have a case that the goods have been wrongly classified, the same cannot be a reason for detaining the goods under Section 129.
On the other hand the respondent authority contended that the goods on verification were found to not answer the description of exempted goods under HSN Code 910, for which the consignment was allegedly booked. Further, the consignment was not accompanied by a delivery challan that is required to accompany any consignment of exempted goods sold by an unregistered person.
The single-judge bench of Justice A.K. Jayasankaran Nambiar observed that non-registration of the consignor, or the alleged misclassification of the goods under transportation, cannot be a ground for detention under Section 129 of the GST Act.”
However, the court said, “the consignor being an unregistered person, and the goods supplied by him to the petitioner being exempted goods, the transportation had to be covered not only by an e-way bill but also by a delivery challan, and since the transportation was not covered by a delivery challan, the respondents were justified in detaining the consignment.”
The Court decided upon the liability of the petitioner under Section 129(1)(b) of the Act and held that the petitioner would have to pay the lesser of an amount equal to 5% of the value of the goods of Rs.25000. In the instant case, the value of the goods being approximately 1000000, the lesser amount would be Rs.25000 which amount the petitioner would necessarily have to pay to obtain a release of the goods and the vehicle.
Therefore, the court while disposing off the petition, directed the respondent authority to release the goods and the vehicle to the petitioner on payment of Rs.25000 by the petitioner, as required in terms of Section 129(1)(b) read with Section 129(3) of the GST Act.
Subscribe Taxscan Premium to view the Judgment
