Radha Fragrance VS Union of India

This writ petition, filed under Article 226 of the Constitution of India, challenges the orders dated 02.03.2019 by the First Appellate Authority (respondent No. 4) and 14.02.2019 by respondent No. 5, which involved the detention of goods and a vehicle.

The petitioner is a registered dealer under the Haryana State Goods and Service Tax Act, 2017 (GST Act of 2017), engaged in the manufacturing and sale of Pan Masala and Chewing Tobacco. The petitioner received orders to supply these products from two registered dealers in the state of Jharkhand, namely M/s ASP Enterprises and M/s Alliance Trading Company, Ranchi.

The petitioner dispatched the goods using four tax invoices dated 02.02.2019. These invoices detailed the following shipments:

1. Tax Invoice No. RFTB/18-19/9 for 30 cartons of Chewing Tobacco valued at Rs. 47,465/-, which included discounts, Integrated GST, and Cess, directed to M/s ASP Enterprises.

2. Tax Invoice No. RF/18-19/10 for 30 cartons of Pan Masala valued at Rs. 49,068/-, inclusive of discounts, Integrated GST, and Cess, also to M/s ASP Enterprises.

3. Tax Invoice No. RFTB/18-19/8 for 30 cartons of Chewing Tobacco valued at Rs. 47,465/-, which included discounts, Integrated GST, and Cess, directed to M/s Alliance Trading Company.

4. Tax Invoice No. RF/18-19/11 for 30 cartons of Pan Masala valued at Rs. 49,068/-, inclusive of discounts, Integrated GST, and Cess, to M/s Alliance Trading Company.

The petition addresses the legal and procedural correctness of the orders that resulted in the detention of the goods and the vehicle.

This writ petition, filed under Article 226 of the Constitution of India, challenges the orders dated March 2, 2019, by the First Appellate Authority (respondent No.4) and February 14, 2019, by respondent No.5, which detained the petitioner’s goods and vehicle. The petitioner is a registered dealer under the Haryana State Goods and Service Tax Act, 2017 (GST Act of 2017), engaged in manufacturing and selling Pan Masala and Chewing Tobacco.

The petitioner had received orders from two registered dealers in Jharkhand, M/s ASP Enterprises and M/s Alliance Trading Company, and was shipping the goods using four tax invoices. The specific invoices were:

• Invoice No. RFTB/18-19/9 dated February 2, 2019, for 30 cartons of Chewing Tobacco worth Rs.47,465/- (including discount, Integrated GST, and Cess) to M/s ASP Enterprises.
• Invoice No. RF/18-19/10 dated February 2, 2019, for 30 cartons of Pan Masala worth Rs.49,068/- (including discount, Integrated GST, and Cess) to M/s ASP Enterprises.
• Invoice No. RFTB/18-19/8 dated February 2, 2019, for 30 cartons of Chewing Tobacco worth Rs.47,465/- (including discount, Integrated GST, and Cess) to M/s Alliance Trading Company.
• Invoice No. RF/18-19/11 dated February 2, 2019, for 30 cartons of Pan Masala worth Rs.49,068/- (including discount, Integrated GST, and Cess) to M/s Alliance Trading Company.

These goods were being transported by M/s Shyam Freight Carrier along with the respective goods receipts and invoices.

On February 4, 2019, the goods in transit from Haryana to Jharkhand were intercepted by the mobile squad (respondent No.5) near Sharkara Sansthan, Kanpur. The driver provided goods receipts No. 413 and 414 and tax invoices No. RF18-19/10 and RF18-19/11. However, during the vehicle verification on February 5, 2019, it was discovered that the vehicle was carrying 120 cartons of Pan Masala and tobacco instead of the 60 cartons indicated by the tax invoices. Additionally, the goods did not have an E-Way Bill as required by Rule 138, as the claimed value was below Rs.50,000/-.

Upon inspection, it was found that each carton contained 200 boxes, with each box holding 32 pouches, each priced at MRP Rs.4/-. The total value of the 60 cartons was determined to be Rs.15,36,000/-. After a 25% discount and excluding tax and Cess, the basic value was Rs.6,12,766, while the declared value on the invoices was collectively Rs.69,600/-.

A show cause notice in Form MOV 07 was issued on February 6, 2019. The petitioner submitted a detailed reply on February 13, 2019, explaining that the tax invoices for the tobacco were misplaced by the driver during interception. They reiterated that the value of each batch of 30 cartons of tobacco was Rs.47,465/-, intended for M/s Alliance Trading Co. and M/s ASP Enterprises. They also questioned the jurisdiction of Uttar Pradesh authorities in intercepting and detaining the goods. Furthermore, the petitioner explained that they had recently started the business and were offering products at prices significantly below the MRP to promote their business.

This writ petition under Article 226 of the Constitution of India challenges the orders dated March 2, 2019, by the First Appellate Authority (respondent No. 4) and February 14, 2019, by respondent No. 5, which involved the detention of goods and a vehicle. The petitioner is a registered dealer under the Haryana State Goods and Services Tax Act, 2017 (GST Act of 2017), involved in the manufacturing and sale of Pan Masala and Chewing Tobacco.

The petitioner received orders from two registered dealers in Jharkhand, namely M/s ASP Enterprises and M/s Alliance Trading Company, Ranchi. The goods were sent via four tax invoices through the transporter M/s Shyam Freight Carrier. These invoices included 30 cartons each of Chewing Tobacco and Pan Masala, totaling four shipments, each valued under Rs. 50,000, inclusive of discounts, Integrated GST, and Cess.

On February 4, 2019, during transit from Haryana to Jharkhand, the goods were intercepted by respondent No. 5’s mobile squad near Sharkara Sansthan, Kanpur. The driver presented goods receipt numbers 413 and 414 and two tax invoices. However, upon inspection on February 5, 2019, the vehicle was found carrying 120 cartons instead of the 60 cartons indicated by the invoices. Additionally, the goods lacked the mandatory E-Way Bill required under Rule 138 because the value was claimed to be below Rs. 50,000. The Mobile Squad found that each carton contained 200 boxes with 32 pouches each, with an MRP of Rs. 4 per pouch, valuing 60 cartons at Rs. 15,36,000. After a 25% discount and excluding tax and Cess, the value was Rs. 6,12,766, while the invoices showed a total of Rs. 69,600.

On February 6, 2019, a show cause notice in Form MOV 07 was issued. The petitioner responded on February 13, 2019, stating that the tax invoices for the tobacco were misplaced by the driver and could not be produced during interception. The petitioner also questioned the jurisdiction of the Uttar Pradesh authorities in detaining the goods and explained that the low prices were promotional.

On February 14, 2019, respondent No. 5, under Section 129(3) of the Central GST Act, 2017 and Section 20 of the Integrated GST Act, 2017, rejected the petitioner’s explanation and demanded an integrated tax of Rs. 7,27,235 along with an equivalent penalty, totaling Rs. 14,54,470. The petitioner appealed under Section 107 of the GST Act of 2017 to the First Appellate Authority, respondent No. 4, which upheld the initial order on March 2, 2019, leading to the current writ petition.

The petitioner’s counsel, Sri M.M. Rai, argued that the State Tax Officers lacked the authority to detain and check the vehicle under Section 4 of the Integrated GST Act, 2017 read with Section 2(91) of the Central GST Act, 2017, as no notification was issued authorizing them as Proper Officers under these sections. He contended that any discrepancy should have been reported to the Haryana State Assessing Officer for assessment proceedings. Furthermore, the counsel reiterated that the tax invoices were created on February 2, 2019, but were not presented due to the driver’s mistake, and that the E-Way Bill requirement applies only to goods valued at Rs. 50,000 or more.

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Radha Fragrance

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