The Kerala High Court held that mere suspicion of mis-classification of goods cannot be the basis for a detention of goods.
The writ petitions raise a common challenge to the legality of orders of detention passed by the respondents authorities under the GST Act.
The petitioner, M/s Podara Foods India is a Company engaged in the manufacture and sale of Power Cables and is a registered dealer under the GST Act. The petitioner had a contract with the Kerala State Electricity Board for the supply of power cables and towards affecting the said supply, it imported power cable end termination kits through Chennai Seaport. The imported items consisting of 33 numbers of end termination kits were contained in 22 packages, and these were cleared through Customs by filing the necessary Bills of Entry for home consumption.
The packages were then loaded onto two vehicles. The inter-state transportation of the goods was accompanied by an E-Invoice that was generated that showed payment of IGST on the consignment, as also an e-way bill corresponding to the said E-Invoice. Part B of the e-way bill contained the details of both vehicles with the specific number of units carried in each. A packing list showing the number of packages also accompanied the transportation.
The goods and the vehicles were detained by the respondent authorities on the ground that there was only one common invoice for 22 packages that was generated in respect of the two consignments, and when compared with the number of packages that were contained in each of the vehicles, there was a shortage of packages in both the vehicles.
It was also found that the petitioner had not complied with the procedure prescribed under Rule 55 (5) of the CGST Rules while transporting goods in semi-knocked down (SKD) or completely knocked down (CKD) condition or in batches or lots. In particular it was pointed out that the consignments were not covered by separate delivery challans for each vehicle.
Mr. A. Kumar, the counsel for the petitioner would contend that there was a complete misunderstanding of the scope of Rule 55 of the CGST Rules and the provisions of the Rule 55 did not get attracted to the transportation in question.
As regards the discrepancies pointed out with regard to the delivery challans, it was contended that the said defects had been subsequently cured, and the details required for co-relating the transport documents with the goods that were being transported were all available with the proper officer who ought to have treated the breach as merely venial or technical and refrained from detaining the goods.
The Single Judge Bench of Justice A.K.Jayasankaran Nambiar clarified that under Section 129 of the Act, if a proper officer who is entrusted with the task of detaining goods, finds that they have been transported in contravention of the rules, he does not have the discretion to condone the procedural lapse or relax its rigour in particular cases. He must interpret the Rule strictly keeping in mind the statutory scheme that aims to curb tax evasion.
The court did not find any reason to interfere with the adjudication orders in Form GST MOV-9 impugned in the writ petition.
“The petitioner is relegated to his alternate remedy of preferring appeals against the said adjudication orders before the appellate authority under the Act. All contentions, legal and factual, are left open to be agitated by the petitioner before the appellate authority,” the court observed.
Therefore, the court directed the stay against invocation of the bank guarantee furnished by the petitioner, shall continue to remain in force for a period of two months from the date of receipt of a copy of this judgment.
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