Mohammed Thahir VS Deputy Assistant Commissioner Service Tax

The petitioner filed a Writ Petition seeking a mandamus to declare the actions of the first respondent as arbitrary and illegal. Specifically, the petitioner challenged the interception and detention of their vehicle (bearing No. AP-03-TE-9508) on August 24, 2018, by the Deputy Assistant Commissioner (ST) in Madanapalle. The vehicle was transporting fresh tamarind from the petitioner to a purchasing dealer in Tamilnadu, and the consignment was covered by a proper invoice, with both parties being registered GST dealers.

During the transit, the Deputy Assistant Commissioner stopped the vehicle and conducted an inspection under Section 68(3) of the Central Goods and Services Tax Act, 2017 (CGST Act). The inspection led to the issuance of a confiscation notice. The notice stated that the driver presented unnumbered invoices dated August 24, 2018. Upon examination, it was found that the goods were labeled as fresh tamarind with HSN Code No. 810. However, upon physical verification, the goods were found to be deshelled dried tamarind instead of fresh tamarind, leading to suspicion regarding the authenticity of the transaction.

The petitioner contended that the interception, detention, and confiscation notice were arbitrary and illegal, as the transaction was legitimate and properly documented.

In this Writ Petition, the petitioner seeks a mandamus to declare the actions of the first respondent as arbitrary and illegal. The petitioner’s vehicle, bearing No.AP-03-TE-9508, was intercepted on 24.08.2018 at 10:30 pm at Madanapalle while transporting “fresh tamarind” from the petitioner to a dealer in Tamilnadu. Despite having a valid invoice and both parties being registered GST dealers, the vehicle was detained, and a confiscation notice was issued.

The Deputy Assistant Commissioner (ST) of Madanapalle intercepted the vehicle under Section 68(3) of the Central Goods and Services Tax Act, 2017 (CGST Act). The driver presented unnumbered invoices dated 24.08.2018. Upon inspection, it was found that the goods were not fresh tamarind but deshelled dried tamarind. The notice recorded several observations: tamarind has four stages, the transported goods were at the fourth stage, the vehicle was intercepted in a suspicious location, and it is impractical to store fresh tamarind in cold storage without drying it, which contradicted the driver’s statements.

The first respondent concluded that the goods were actually dried seeded tamarind, falling under Entry No.813, taxable at 5% under the IGST Act. The goods were presumed to be transported to evade taxes due to the lack of serial numbers in the invoices and the nature of the goods. As a result, both the goods and the vehicle were detained under Section 129(1) of the CGST Act and Section 68(3) of the State/Union Territory Goods and Services Tax Act, leading to an order of detention in FORM GST MOV 06 served on 27.08.2018. The first respondent proposed to confiscate the goods under Section 130 of the CGST Act, alleging transportation without valid documents aimed at tax evasion.

In this Writ Petition, the petitioner seeks a mandamus to declare the actions of the first respondent (the Deputy Assistant Commissioner of State Tax, Madanapalle) as arbitrary and illegal. The first respondent intercepted and detained a vehicle (bearing No. AP-03-TE-9508) carrying “fresh tamarind” from the petitioner to a purchasing dealer in Tamil Nadu on the night of August 24, 2018. Despite the goods being covered by a valid invoice and both parties being registered GST dealers, the vehicle was stopped, and a confiscation notice was issued.

Upon intercepting the vehicle, the Deputy Assistant Commissioner inspected the goods under Section 68(3) of the Central Goods and Services Tax Act, 2017 (CGST Act). The driver presented unnumbered invoices dated August 24, 2018. The inspection revealed that the goods were deshelled dried tamarind, not fresh tamarind as stated in the invoice. The first respondent noted that fresh tamarind could not be stored in cold storage without drying, as it would spoil, and therefore concluded that the goods were dried tamarind, taxable at 5% under the IGST Act.

The respondent detained both the goods and the vehicle under Section 129(1) of the CGST Act, issuing an order of detention in FORM GST MOV 06. The respondent presumed that the goods were being transported to evade taxes, leading to a proposal to confiscate the goods under Section 130 of the CGST Act. The petitioner was also informed of their liability to pay tax, penalty, and other charges.

The petitioner challenges this show cause notice, claiming it suffers from an inherent lack of jurisdiction. The petitioner’s counsel, Sri G. Narendra Chetty, referred to a circular from the Chief Commissioner of State Tax dated July 12, 2018, and sections of the CGST Act to argue that the respondents should have first called upon the petitioner to pay tax and penalty under Section 129(1) before proceeding to confiscate the goods under Section 130(1). The impugned notice also erroneously demanded tax, penalty, and fine in addition to proposing confiscation.

The July 12, 2018 circular stated that no vehicle should be detained for disputes over tax rates if all required statutory documents were present and the goods’ description in the documents matched the goods being transported. The show cause notice indicated a discrepancy between the description of the goods (fresh tamarind) in the invoice and the actual goods transported (dried tamarind), thereby justifying the first respondent’s suspicion and actions.

seizure, further proceedings shall be initiated in accordance with the provisions of Section 130 of the CGST Act.

The petitioner in this case seeks relief through a Writ Petition, specifically a mandamus, to declare the actions of the first respondent as arbitrary and illegal. The incident in question occurred on August 24, 2018, at 10:30 PM in Madanapalle, involving the interception of a vehicle bearing registration number AP-03-TE-9508 while it was transporting fresh tamarind from the petitioner to a dealer in Tamil Nadu. The interception led to the issuance of a confiscation notice by the first respondent, citing discrepancies between the declared goods and the actual contents of the vehicle, which were identified as deshelled dried tamarind rather than fresh tamarind.

The first respondent justified the confiscation on the grounds that the goods were misrepresented, being the fourth stage of tamarind, and were being transported in a manner suggesting an attempt to evade taxes. Consequently, both the goods and the vehicle used for transportation were detained under relevant sections of the CGST Act. The petitioner argues that the actions taken were beyond the jurisdiction of the first respondent, particularly pointing out errors in the confiscation notice and discrepancies with a circular issued by the Chief Commissioner of State Tax.

The petitioner’s counsel emphasizes that proper procedure was not followed, as the first respondent directly moved to confiscate the goods without first invoking Section 129(1) of the CGST Act, which requires the payment of applicable tax and penalty before confiscation. Additionally, the counsel highlights that the show cause notice issued by the first respondent lacked jurisdiction as it demanded both the payment of tax and penalty and the confiscation of goods, which exceeds the authority granted.

In response, the first respondent justifies their actions based on their interpretation of the situation and the provisions of the CGST Act. They argue that the discrepancies between the declared goods and the actual contents of the vehicle warranted confiscation, especially considering the potential tax evasion indicated by the misrepresentation. They further assert that the circular cited by the petitioner’s counsel does not apply in this case due to the apparent inconsistencies in the description of the goods.

The relevant sections of the CGST Act, particularly Sections 129 and 130, are invoked by both parties to support their arguments. These sections outline the procedures for the detention, seizure, and confiscation of goods in cases of contravention of the Act’s provisions. They also emphasize the importance of due process, including providing the concerned parties with an opportunity to be heard before any determination of tax, interest, or penalty.

Ultimately, the Writ Petition seeks to challenge the legality and jurisdiction of the actions taken by the first respondent, urging the court to declare them arbitrary and illegal. The case hinges on the interpretation of the CGST Act and the procedural correctness of the actions taken during the interception and subsequent confiscation of the goods.

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