The Karnataka High Court quashed the order of detention of goods conveyance vehicle by GST authorities passed for the second time against a Transporter by initiating a proceeding under section 67 of the CGST Act.
The petitioner, a transporter registered under the CGST Act, 2017 and IGST Act, 2017 was engaged by M/s. Venkataramana Traders, a registered supplier in Karnataka to transport 300 bags of arecanut to a recipient registered dealer in Delhi, M/s. Gulli Enterprises.
The consignment was loaded in a truck and when the goods were in transit, the officials of the respondent intercepted the vehicle at Sagar, Shimoga District. On enquiry, the driver of the vehicle furnished the E-way bill and invoice which related to a different consignment of 220 bags of areca by the supplier to the same subject recipient registered at Delhi by a lorry.
The authorities issued an order in Form GST MOV-02 and seized the truck and the goods by an order of detention in Form GST MOV-06. A notice under Section 129(3) of the CGST Act in Form GST MOV No.7 was issued requiring the payment of tax of Rs.2,12,100/- and penalty of Rs.2,12,100/-.
The petitioner claimed that the e-way bill and the invoice relating to the transport by another vehicle bearing registration number MH-09-C-4289 was handed over to the driver by mistake and that the correct e-way bill along with the invoice showing the payment of the Central Tax by the lorry bearing no. No.HR-55-AF-7882 was furnished before the Tax officials at Shimoga, which was not accepted. Thus, a payment challan and a mandate form for a sum of Rs.4,24,200-00 towards inter-State tax of Rs.2,12,100/- and penalty of Rs.2,12,100/- was generated and paid on 08.03.2019.
Upon the payment of tax and penalty, the vehicle and the goods were released as per Form GST MOV-05.
The petitioner contended that with the payment of the tax and penalty all the proceedings in respect of the notice under Section 129(3) of the CGST Act stood concluded as provided under Section 129(5) of the CGST Act.
However, the vehicle and the goods were again seized at Bijapur and the statement of the driver was recorded by the Assistant Commissioner of Central Tax. An order for physical verification in Form GST MOV-02 was issued purportedly on the ground that “prima facie the documents tendered were found to be defective”.
The petitioner submitted that once the tax and penalty is paid, all proceedings are deemed to be concluded as provided under Section 129(5) of the CGST Act. Therefore, he contended that initiation of subsequent proceedings to seize the very same lorry and the goods is illegal.
The Single Judge Bench of Justice Natraj Rangaswamy held that in a proceeding under Section 67 of the CGST Act against the supplier, the respondent was not justified in seizing the perishable goods in transit, more so when the goods had suffered tax and penalty.
Therefore, the court directed the respondent to release the lorry and the goods carried by it which is covered by the E-Way bill.
“However, liberty is reserved for the proper authority under the CGST Act to continue the proceedings initiated under Section 67 and determine the amount of tax payable on the previous supplies made under Section 74 or initiate any penal action under Section 132 of the CGST Act against the supplier or the registered recipients for the alleged fraudulent availing of input tax credit or the wrongful generation of invoices,” the bench said.
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