Rateria Laminators V. Additional Commissioner Grade-2

1. Heard Sri Suyash Agarwal, learned counsel for the petitioner and Sri Rishi Kumar, learned Additional Chief Standing Counsel. Present writ petition has been filed with the following prayers:

“A. Issue a writ order or direction in the nature of scertiorari quashing order dated 18.4.2023 passed by Additional Commissioner Grade-2 (Appeal)-II, Commercial Tax/State Tax, Kanpur, respondent no.2 u/s 107 of the UPGST Act 2017 (Annexure No.14).

B. Issue a writ order or direction in the nature of scertiorari quashing order dated 27.3.2023 passed by Assistant Commissioner , Mobile Squad, Bhognipur, Ramabai Nagar, Kanpur Dehat, U.P. Respondent no.2 u/s 129(3) of the UPGST Act 2017 (Annexure No.11).

C. Issue a writ order or direction in the nature of mandamus directing, respondent no.2, Assistant Commissioner , Mobile Squad, Bhognipur, Ramabai Nagar, Kanpur Dehat U.P. To release goods and vehicle seized vide seizure memo dated 23.3.2023 passed in GST MOV-06 forth with.

D. Issue a writ order or direction in the nature of prohibition restraining the respondent no.2 from emplying coercive measures to recovery penalty pursuant to order dated 27.3.2023 passed From GST MOV- 09.”

2. Since the GST Tribunal has not yet been formed the present writ petition is being entertained against the aforementioned impugned orders.

3. Brief facts of the case are that petitioner is a Company registered under the Companies Act, 1956 having its business at 1,132, Cotton Street, Burrabazar, Kolkatta West Bengal. The petitioner in its normal course of business made inward supply of B55HM0003NA G-LEX HDPE-2 HSN 3901.20.00 15 from GAIL, Auraiya U.P. The petitioner also made inward supply of similar item from GAIL Auraiya U.P. for which two invoices dated 6.3.2023 were prepared, copies of which have been annexed as Annexure 2 to the writ petition. For movement of goods from Auraiya Uttar Pradesh to Jalpaiguri, West Bengal two E-way Bills were generated having validity upto 12.3.2023, copies of which are annexed as Annexure 3 to the writ petition. A GR was also prepared on the same day i.e. 6.3.2023 in which invoice numbers and E-way bills have specifically been mentioned. It is stated that after completing the formalities goods were in transit from Auraiya U.P. to Jalpaiguri, W.B. and on way the Driver of the Vehicle No. UP-77-AN-6825 fell ill and there was also some break down of the vehicle, therefore onwards journey could not be continued to reach the destignation before 12.3.2023.

4. The Vehicle was inercepted by respondent no.2 on 13.3.2023 and Form GST MOV04 was prepared on 14.3.2023. Thereafter Form GST MOV01 was prepared on 23.3.2023 and consequently an order was passed on the same day that the goods in question are being carried without proper ducuments as E-way bills have expired. Thereafter on the same day From GST MOV 06 was prepared and subsequently respondent no.2 issued notice in From GST MOV 07 under section 129(3) of the UPGST Act (hereinafter referred to as the Act) proposing to impose penalty of Rs. 11,18,624/- under section 129(1)(a) of the Act and Rs. 36,66,606/- under section 129(1)(b) of the Act which has been annexed as Annexure 9 to the writ petition. An order under section 129 (3) of the Act was passed directing the petitioner to deposit Rs. 11,18,624/- for release of goods.

5. Being aggrieved with the said order the petioner preferred appeal before under section 20 of the Act before respondent no.1 which has been rejected vide order dated 18.4.2023. Hence the present writ petition.

6. Learned counsel for the petitioner submits that the petitioner is a registered dealer having GSTIN No. 19AABCR2147R1ZU and in its normal course of business made purchases from the said registered dealer (GAIL) which is Central Government undertaking for which two invoices were raised on 6.3.2023. Consequently for sending goods to its onward journey to West Bengal two E-way bills were generated on the same day but the goods could not reach its destination before expiry of the E-way bills which was valid upto 12.3.2023. The goods were intercepted by the respondent no.2 on 13.3.2023 and detained on the ground that E-way bills have expired. He further submits that on physical verification as well as from the perusal of the documents there was neither any discripency in the items so transited nor in the quality and quantity of the goods. He further submits that there was no intention of the petitioner to avoid payment of tax. He further submits that the goods have been detained on the technical fault as the E-way bills have expired.

7. He further submits that pursuant to the notice as to under what circumstances the vehicle could not reach its destination before expiry of E-way bills which was valid upto 12.3.2023, the petitionere submitted its reply explaining the reason that due to medical exigency the driver fell ill and due to some breack down in the vehicle the goods could not reach its destination before 12.3.2023. He further submits that since the driver of the vehicle was not aware of GST law, he could not apply for extension of the E-way bills before its expiry.

8. He further submits that while passing the impugned order under section 129(3) of the Act only one line has been mentioned that the explanation submitted by the petitioner is not acceptable.

9. He further submits that against the said order an appeal was preferred before respondent no.1 which has been rejected without considering the material on record. He further submits that transit of goods could not reach its destination which was beyound the control of the petitioner as driver fell ill and break down in the vehicle. In support of his submission he has relied upon a Division Bench judgment of this Court in Gobind Tobacco Manufacturing Co. vs. State of U.P. (2022 (61) GSTL 385 (All.) He has also relied upon a judgment of the Supreme Court in Assistant Commissioner (ST) vs. Satyam Shivam Papers Pvt. Ltd. ( 2022 (57) GSTL 97 (SC) in which while rejecting the claim of the revenue cost has also been enhanced by the Apex Court. He further submits that proceedings under section 129(1) of the Act could be initiated if the parties come forward and deposit the penalty of tax but once the party is not ready to deposit the tax under section 129(3) of the Act the respondents are duty bound to initiate proceedings by taking recourse to Sections 73,74 and 75 read with Section 122 of the Act. In support of his submission he has relied upon the judgment of this Court in Bharti Airtel Ltd. vs. State of U.P. (2022) 1 Centax 79 (All.). He further submits that the impugned order passed under section 129(3) of the Act could not be sustained for determining the tax and penalty in pursuance of the proceedings under section 129(3) of the Act. He further submits that in view of the submissions mentioned above the impugned orders deserve to be set aside and the detained goods deserve to be released without penalty.

10. Per contra, Sri Rishi Kumar, learned ACSC supports the impugned orders passed by the respondents authorities and submits that goods were in transit after expiry of the E-way bills which was a clear contravention of the provisions of the Act. He further submits that the goods were transited after expiry of the E-way bills which shows that there was intention to evade payment of tax. He further submits that the explanation submitted by the petitioner is without any basis and the materials in support thereof that the driver fell illl and there was break down in the truck carrying the goods were exceptional in nature. He further submits that neither any material was brought on record to show that the driver was ill and was under medical care nor any material was brought on record about the break down of the truck and the same got repared before the authorities below, therefore, the authorities were justified in passing the imugned orders. He prays for dismissal of the writ petition.

11. After hearing the learned counsel for the parties and perusing the records, it is admitted that goods of the petitioner transited from the State of Uttar Pradesh to the State of West Bengal and the goods were accompanied by requisite documents such as invoices, E-way bills, GR etc. as mentioned above. The E-way bills were valid upto 12.3.2023 whereas the goods have been intercepted on 14.3.2023. Thereafter proceedings were initiated only the ground that the goods were transited after expiry of the E-way bills. No other discripancy has been found either in quality, quntity or goods as disclosed in the invoices, E-way bills or GR. While rejecting the claim of the dealer the assessing authority has observed as under:

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