A two-judge bench of the Gujarat High Court has held that the department cannot detain the goods on failure to fill Part-B of the E-way Bill if the supply is not taxable under GST.
The petitioners are engaged in the import and sale of dietary food products such as protein powder of different flavours. The department detained the vehicle of the petitioner on the ground that Part-B of the E-way bills was not generated.
The petitioners argued that upon being informed about the detention, the petitioners immediately generated Part-B of the E-way bills in respect of the transactions and approached the second respondent and gave explanation. It was submitted that the goods being perishable in nature and due to urgency of transporting the goods, the transporter had commenced transportation of goods immediately on clearance by the customs authorities without waiting for Part-B of the E-way bills. It was also submitted that the imported goods were taken by the first petitioner to its own godown directly from the bonded warehouse and, therefore, it was not a transaction for supply in respect of which goods and services tax (GST) would be leviable and that IGST had already been paid on the transaction even before the commencement of movement of the goods.
The department, however, refused to release the goods for want of Part-B of E-way bills and levied penalty.
The bench comprising Justice Harsha Devani and Justice Bhargav D Karia observed that on perusal of the impugned order imposing tax and penalty against the petitioner, it is revealed that the basis for computing the additional tax is the IGST paid by the petitioners.
“Moreover, in the impugned order there is not even a whisper as regards the submissions advanced on behalf of the petitioners, nor have the same been dealt with in the body of the order. No reasons have been assigned by the second respondent for the purpose of holding the petitioner liable to payment of tax and penalty despite the fact that IGST had already been paid on such transaction and the goods were being moved from the customs warehouse to the petitioner’s own godown and it being the case of the petitioners that there was no supply, and hence, the provisions of GST Act are not applicable. The impugned order is, therefore, totally bereft of any reasoning,” the bench said.
Quashing the order, the bench held that “Reasons, it is well known, are the heart and soul of an order passed by a judicial/quasi-judicial order, without which it is difficult to pronounce one way or other as regards the validity of such order. In the absence of any reasons to support the findings given by a judicial/quasi judicial authority, it is not possible to ascertain as to how the authority came to a particular conclusion. Under the circumstances, in the absence of any reasons in support of the tax and penalty levied by the second respondent, the impugned order stands vitiated as being an unreasoned order and as such cannot be sustained.”
However, the goods of the petitioner being perishable goods, the bench held that it would not be just, proper and reasonable to keep such goods under detention any longer. Considering this, the bench ordered that the petitioners would be entitled to the release of the conveyance as well as the goods in question subject to compliance of clause (c) of section 129(1) of the CGST/GGST Acts.
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