Proceedings u/s 129 of GST Act are Summary Proceedings: Allahabad HC [Read Order]

The Allahabad High Court has ruled that proceedings under section 129 of the GST Act are summary proceedings, meaning that the assessee conveying the commodities bears the burden of demonstrating the actual physical movement of the goods.  It also said that if a product is undervalued, the government can confiscate it.

Read More: S. 12A Amendments on Timely Filing Apply from AY 2018-19, Not Retroactively: ITAT Allows Society’s Exemption

The petitioner, Jaya Traders, deals in scented tobacco and pan masala.  An order for the supply of goods to Delhi was given to the petitioner.  The products were allegedly shipped from West Bengal/Assam to Delhi with tax invoices 41 to 45 dated 15.9.2021, and the petitioner failed to create the e-way bill since the value of the items was allegedly less than the allowed amount.

GST Compliance Calender from 1-03-2025 to 31-03-2026, Click Here

The petitioner received a show-cause notice after the commodities were seized in Kanpur.  The petitioner responded that a crossing challan was already with the items and that an e-way bill was not required because the products were worth less than Rs. 50,000. According to the statement, the detaining/seizing authority lacked the right to hold the commodities for undervaluation.

The petitioner appealed the authority's penalty order, which was denied on the grounds that it was made without taking into account relevant documentation. The petitioner argued that the commodities could not have been detained under Section 129 of the GST Act on the grounds of undervaluation, contesting the Appellate Authority's ruling.

On the other hand, because the products were not accompanied by legitimate paperwork, the respondents' counsel contended that there was an intention to dodge tax. It was argued that even though the products were seen moving from West Bengal/Assam to Delhi, the driver claimed that the commodities were loaded in Kanpur. It was contended that the petitioner had failed to provide any documentation proving that the items were being shipped from Assam or West Bengal.

The Court noted that by failing to provide any toll receipts or other documentation, the petitioner had not refuted the driver's claim that the commodities had been loaded in Kanpur and that the products had been transported from West Bengal/Assam to Delhi.  Additionally, it was noted that the products were produced in Kanpur.

Read More: Misdeclaration of Quantity and Value in MACE Grade III Import: CESTAT sets aside Re-determined Value and Penalties

 It was also noted that the penalty and detention orders were issued on other grounds, which the petitioner did not refute, even though the petitioner had contested the contested order because the authority lacked the authority to assess the worth of the commodities.

The Court emphasized that when products are being carried in violation of the GST Act's provisions and its implementing regulations, Section 129 actions may be brought.  According to Section 31 of the Act, tax invoices must include the description, amount, and value of the products as well as the tax that was applied to them.  The GST Rules' Rule 46(j) and (k) specify the information that must be included in the tax invoice, such as the total worth of the items supplied and the taxable value of those goods.

Know the complete aspects of tax implications of succession, Click Here

A single bench of Justice Piyush Agrawal held, “Under the taxing statute, in the original proceeding or in the summary proceeding, the primary burden is to be discharged by the assessee by bringing on record the cogent material. The burden of proof is shifting to the department only in the re-assessment proceeding or subsequent proceeding not being the original proceeding. In other words, the assessee in the original proceeding is duty bound to bring the material on record in support of its claim but in the subsequent proceeding i.e. re-assessment proceedings, the burden shifts on the revenue.”

The bench ruled in rejecting the appeal that the assesee transporting the commodities had to disclose the actual worth of the goods.  It was decided that if the commodities were not declared to be of their actual value, the authorities could seize them.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates