2024(06)LCX0250

Gujarat High Court

Landmark Cars Private Limited

Versus

Union of India

R/SPECIAL CIVIL APPLICATION NO. 1487 of 2020 decided on 14-06-2024

IN THE HIGH COURT OF GUJARAT AT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 1487 of 2020

LANDMARK CARS PVT. LTD.
Versus
UNION OF INDIA & ANR.

Appearance:
UCHIT N SHETH(7336) for the Petitioner(s) No. 1
for the Respondent(s) No. 2
AYAAN A PATEL(8900) for the Respondent(s) No. 2
MR ANKIT SHAH(6371) for the Respondent(s) No. 1

CORAM: HONOURABLE MR. JUSTICE BHARGAV D. KARIA
                    and
                  HONOURABLE MR. JUSTICE NIRAL R. MEHTA

Date : 14/06/2024

ORAL ORDER

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr.Uchit Sheth for the petitioner and learned advocate Mr. Dhaval Vyas for the respondents.

2. Rule returnable forthwith. Learned advocate Mr.Dhaval Vyas waives service of notice of rule for the respondents.

3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside detention order dated 11.01.2020 passed in Form GST MOV-6 and order dated 14.01.2020 passed in Form GST MOV-9 under Section 129 of the Central/Gujarat Goods and Service Tax Act, 2017 (hereinafter referred to as “the CGST Act and GST Act”).

4. Brief facts of the case giving rise to this petition are as under:-

4.1 The petitioner is a private limited company having place of business at Sun Court, Near Sola Flyover, S.G. Road, Sola, Ahmedabad 380 063. The petitioner is inter alia an authorized distributor of Mercedes-Benz cars. The petitioner purchased the cars from the manufacturing company and thereafter sells the cars.

4.2 The petitioner purchased car bearing chassis number WDD2131046L028488 from the manufacturing company i.e. MercedesBenz India Pvt. Ltd. on 9.12.2019.

4.3 While the head office of the petitioner is located in Ahmedabad, the petitioner has a branch in Thane in the State of Maharashtra, which is also duly registered under the Central/Maharashtra Goods and Services Tax Acts, 2017. The petitioner also has a branch in the State of Madhya Pradesh.

4.4 The branch of the petitioner in Maharashtra had requested the head office in Gujarat for delivery of the car in question for further sales in Maharashtra. Upon such request, the petitioner generated stock transfer invoice, wherein value was mentioned as cost price.

4.5 The Petitioner contacted its transporter for transport of the car to its branch. The transporter sent lorry receipt through email dated 10.1.2020 giving details of the truck which would carry the car.

4.6 The Petitioner generated e-way bill on the basis of the stock transfer invoice and the lorry receipt. The truck number was mentioned as stated in the lorry receipt. The chassis number of the car was also mentioned in the e-way bill.

4.7 The car in question was loaded in the truck as mentioned in the e way bill and lorry receipt on 10.1.2020. While the truck was carrying the car it suffered a breakdown and hence the transporter by way of emergency measure sent a replacement truck with instructions to the driver to inquire when he reaches mid-way around Surat as to whether the original truck was repaired or not and whether he is to continue in the replacement truck.

4.8 The truck carrying the car of the Petitioner was stopped for verification by the 2nd Respondent authority on 11.1.2020. The driver of the truck produced the stock transfer invoice and e-way bill in respect of the car being transported. On being asked as to why the truck number mentioned in the e- way bill was different, the driver explained that it was only a replacement truck since the original truck had suffered breakdown and that if it is immediately repaired then the original truck would be sent for resuming transportation.

4.9 The inspector submitted a physical verification report in Form GST MOV-4 on the very same date, wherein no discrepancy was found in the car being transported and the documents thereof.

4.10 The 2nd respondent-authority, however, still passed impugned detention order dated 11.1.2020 (annexed at Annexure A) in Form GST MOV-6 solely on the ground that there was mismatch in vehicle number as mentioned in the e- way bill and the actual vehicle.

4.11 The 2nd respondent authority further issued notice in Form GST MOV-7 on the very same day asking the Petitioner to show cause as to why tax and penalty should not be demanded under Section 129 of the GST Acts for release of the goods and vehicle.

4.12 The petitioner gave a detailed reply to the notice on 12.1.2020, wherein it was explained that the goods were being transported to the branch of the petitioner in Maharashtra and they were supported by stock transfer invoice as well as e-way bill and thus, there was no question of there being any contravention of the provisions of the GST Acts or any intention to evade tax. Even qua vehicle number was concerned it was explained that this was because of breakdown of the vehicle in transit but the same did not have any bearing on the validity of the transaction.

4.13 The petitioner produced extract of sales register for 10.01.2020 as well as invoice for repair of the original vehicle as forwarded by the transporter along with the aforementioned reply.

4.14 Thereafter the petitioner wrote an email to the 2nd respondent authority on 15.01.2020 relying upon circular dated 14.9.2018 issued by the Central Board of Indirect Taxes and Customs, wherein it was clarified that in cases where there were minor errors in the e-way bill the goods were to be released on payment of token penalty under Section 125 of the GST Acts and that proceedings under Section 129 of the GST Acts were not to be initiated.

4.15 The 2nd respondent-authority responded by email dated 15.01.2020, wherein he conveyed that he had passed order demanding tax and penalty under Section 129 of the GST Acts (annexed at Annexure B) and that the benefit of circular dated 14.9.2018 was not available to the petitioner since the case of the petitioner did not fall under the instances of errors as mentioned in the said circular.

4.16 The transporter has in fact thereafter submitted on oath that the aforementioned facts and sequence of events is correct.

5. Learned advocate Mr.Uchit Sheth for the petitioner submitted that the respondent no.2 could not have demanded tax and penalty under Section 129 of the GST Act as the goods being transported were duly accompanied by tax invoice and e-way bill.

6. It was submitted that condition precedent for invoking Section 129 of the GST Act that movement in the goods should be in contravention of the provisions of the GST Act was absent. It was submitted that respondent no.2 failed to appreciate that the chassis number of the car being transported was mentioned in the e-way bill and hence, it was established beyond doubt that the e-way bill for the very same goods have been generated and therefore, the impugned order passed under Section 129 of the GST Act on the ground that the petitioner could not produce the valid e-way bill for the car being transported is only without jurisdiction and liable to be quashed and set aside.
 

7. It was submitted that an error in one of the columns of the e-way bill at the best can be said to be procedural breach of the rules, which can attract penalty under Section 129 of the GST Act, more particularly in the facts of the case when it is established on the basis of the chassis number that e-way bill was for the very goods, which were being transported and minor error in e-way bill does not justify an action under Section 129 of the GST Act.

8. Learned advocate Mr.Sheth referred to and relied upon the circular issued by the Central Board of Indirect Taxes dated 14.09.2018, which clearly lays down that detention under Section 129 of the GST Act would be permissible in absence of valid e-way bill, but not in case of minor errors in e-way bill. It was submitted that the said circular issued under Section 168 of the GST Act was binding upon the respondent no.2 and therefore, the impugned order dated 14.01.2020 demanding tax and penalty is without application of mind and without jurisdiction as the entire order is based on the premise that the goods were not accompanied by valid e-way bill.

9. It was submitted that the in fact the chassis number of the car being transported was mentioned in the e-way bill, it cannot be said that the transportation was without support of e-way bill and only mismatch that was noticed was in vehicle number for which also the petitioner explained that this was due to the breakdown of the original truck and invoice showing repair of the truck has forwarded by the transporter was also produced before the respondent no.2- authority.

10. It was submitted that the demand of tax and penalty raised by the respondent no.2 solely on the ground that the vehicle number as mentioned in the e-way bill was incorrect is wholly arbitrary and illegal and contrary to the provisions of Section 129 of the GST Act as the said provision is only to ensure that no unaccounted movement of goods takes place. It was further submitted by learned advocate Mr.Sheth that the eway bill for a particular transaction is not generated and it is possible to suspect that the transaction was not intended to be accounted for, however, in the facts of the case, it is not in dispute that the invoice and eway bill was accompanying the goods and the chassis number of the car being transported to the branch of the petitioner in Maharashtra was mentioned in the e-way bill and therefore, it was beyond doubt that the transaction was accounted and only the mismatch in truck number because of the original truck has suffered breakdown and the transporter has sent temporary replacement truck cannot be the ground to invoke the provisions of Section 129 of the GST Act. Learned advocate Mr.Sheth in support of his submissions referred to and relied upon on the decision of this Court dated 11.10.2019 in the case of F S Enterprise vs. State of Gujarat, rendered in Special Civil Application No.7061 of 2019, wherein it is held that the transport receipt is not a document required under the GST Act and therefore, the same as such not relevant, however, in any case, invoice number as mentioned in the transport receipt was the same and therefore, there was no error as alleged by the respondent no.2. With regard to mentioning of wrong rout by the driver, it was submitted that the driver had merely stated that he had been instructed to temporarily commenced transportation and inquired when he would reach at Surat so as to whether the original truck was reach or not. It was, therefore, submitted that there is no question of e-way bill being of wrong route and the e-way bill was in need till the branch of the petitioner in Thane as is cleared from the annexure to the statement in Form GST MOV-1.

11. Learned advocate Mr.Sheth has submitted that it is not in dispute that the goods were moving from the premise of the petitioner in Gujarat to its branch in the State of Maharashtra and therefore, it was an inter State supply and leavy of CGST and SGST on the transaction, which is an inter State supply is in any case wholly without jurisdiction and illegal. It was submitted that the Goods and Services (Compensation to States) Act, 2017 is a separate legislation providing for imposition of cess on specified goods and there is no provision for search and seizure or detention of goods in the said Act and Section 11 of the Said Act borrow certain provisions of the GST Act, but does not borrow the provision relating to detention, search and seizure and in absence of any such provision, the demand of compensation as an equivalent penalty in the impugned order is also without jurisdiction. It was, therefore, submitted that the impugned orders is passed without proper inquiry and application of mind. It was further submitted that the impugned order is passed without considering the reply dated 13.01.2020 filed by the petitioner.

12. Per contra, learned advocate Mr.Dhaval Vyas for the respondent no.2-authority submitted that the impugned order is passed after proper verification and application of mind and on the basis of the circular no.64/38/18 dated 14.09.2018, which provides that for non-furnishing information in e-way bill in part V-B of Form GST EWB-01 amounts to the e-way bill becoming not a valid document for the movement of goods as per explanation of Rule 138 (3) of the CGST Rule except in case whether the goods are transported for a distance of upto 50 kilometers within the State or union territory or from the place of business of the transporter to the place of business of the cosigner or the consignee as the case may be. It was, therefore, submitted that admittedly in part-B of the e-way bill, the number of the truck was not mentioned correctly and therefore, the e-way bill was held to be an invalid document.

13. Learned advocate Mr.Vyas further relied upon the following averments made in the affidavit-in-reply filed by respondent no.2:-

“9. From the above, it is clear that the situations mentioned at Para 5 of Circular No. 64/38/2018-GST, as discussed above, is not the situation in the petitioner's case on hand as the conveyance No.GJ01LQ9720 was carrying the goods from Ahmedabad to Surat (Gujarat) whereas the ewaybill produced shows the movement from Ahmedabad to Thane (Maharashtra) by conveyance No.GJ01HT9061. Thus, both the delivery places and the conveyance numbers are different, hence, there is a contravention of Section 129 of CGST Act, 2017 and accordingly, the demand has been correctly confirmed in FORM GST MOV-09 dated 14.01.2020.

10. The movement of the goods was from Ahmedabad to Surat (Gujarat) and the same has been confirmed by the person in charge of the conveyance bearing No.GJ01LQ9720, hence, it is intra-state supply which attracts levy of CGST and SGST and accordingly the taxes and penalties have been rightly imposed and confirmed vide FORM GST MOV-09 dated 14.01.2020.

11. This is not the case of imposition of the cess but the case of contravention of the provisions of e-way bill, as contained under Section 129 of CGST Act, 2017 which clearly speaks about imposition of taxes and penalties. Further, in the absence of any document relating to the goods in movement it is not possible to ascertain the value of the goods in conveyance. However, the documents like e-waybill No.641168424873 dated 10.01.2020 generated for stock transfer invoice No.LCPL/STKOUT/GJ/49/19- 20 dated 10.01.2020 for the similar kind of goods i.e.mercedes benz car, has been produced but it was for another carrier conveyance/vehicle No.GJ01HT9061. The said No. LCPL/ STKOUT/GJ/49/19-20 dated 10.01.2020 invoice being carried by the person in charge of the vehicle/conveyance bearing No.GJ01LQ9720, shows the value of goods Rs.39,06,190/- and the applicable tax @28% IGST is Rs. 10,93,733.20/- and Cess @20% is Rs.7,81,238/- which has been considered for calculation of applicable tax and penalty in the present case wherein no e-way bill has been generated for the similar kind of goods i.e.mercedes benz, which is loaded in the vehicle No.GJ01LQ9720 and was in movement without valid ewaybill/invoice and accordingly, the applicable tax thereon works out to Rs.5,46,867/- CGST @14% and Rs.5,46,867/- @14% SGST and Rs.7,81,238/- Cess @20%. Hence, there was a contravention of the provisions of section 68 of CGST Act, 2017 read with Rule 138A of the CGST Rules, 2017 and accordingly, the provisions of section 129 have been rightly invoked in the present case and the applicable taxes (i.e.CGST, SGST, Cess) and penalties (i.e.CGST, SGST, Cess) is also rightly imposed and confirmed.

12. The present order in FORM GST MOV-09 dated 14.01.2020 has been passed after following the due process and principles of natural justice. Shri Nitesh Jain, Managing Partner of M/s.N.J. Jain & Associates, Chartered Accountants, 407, Aaryan Workspaces, Opp. Gala Business Centre, H.L.College Road, Navrangpura, Ahmedabad-380009, Gujarat, on behalf of the supplier viz.M/s. Landmark Cars Private Limited, Sun Court, Survey No.383/P, FP37 & 38, Near Sola Flyover, S. G. Road, Ahmedabad-380063 having GSTIN No.24AABCL1862B1Z2 (hereinafter referred to as "supplier" for the sake of brevity), appeared for personal hearing on 13.01.2020 at 04.00 PM. Shri Nitesh Jain produced Letter of Authority dated 11.01.2020, wherein, he is duly authorized by the aforesaid supplier to represent them (supplier) in connection with their (supplier's) e-way bill matter and produce the accounts and documents connected therewith and that the explanations and statements of Shri Nitesh Jain will be binding on the supplier. Shri Nitesh Jain said that the goods were loaded on the vehicle which was mentioned in the ewaybill produced, however, there was breakdown in that vehicle on way to the destination but neither the transporter nor the driver informed them regarding breakdown of the vehicle.”

14. Referring to the above averments, it was submitted that the impugned order is passed after assuming the jurisdiction by the respondent no.2 in accordance with the provisions of the Act and the Rules as well as binding the circular issued by the Board.

15. Considering the submissions made by learned advocates for both the sides, it is not in dispute that in the facts of the case e-way bill accompanying the goods refers to the chassis number of the car, which were being transported. The only error found by the respondent authority in the e-way bill is that the correct number of the vehicle was not mentioned in part-B of the e-way bill, for which the petitioner has explained that the truck number of the vehicle, which is mentioned in the e-way bill was suffered breakdown and therefore, the goods were being transported in another truck. The statement in Form made by the driver in Form GST MOV-01 also refers to the transportation of the goods from Ahmedabad to Surat only with regard to the carrying out the temporary arrangement made to reach upto Surat so as to ship the cars being transported in the vehicle whose number is mentioned in the e-way bill. It is also not in dispute that the goods were stopped transfer from Ahmedabad to the branch of the petitioner at Thane in Maharashtra and does not involve any transaction or sale of purchase.

16. In view of such undisputed facts, it is clear that there was no intention of the petitioner to transfer the goods without being accounted for, which is the main intention of Section 129 of the GST Act. Reliance placed on the circular no.64/38/18 on behalf of the respondent no.2 is on the contrary applies to the facts of the case in favour of the petitioner. Paragraph no.4 of the said circular reads as under:-

“4. Whereas, section 129 of the CGST Act provides for detention and seizure of goods and conveyances and their release on the payment of requisite tax and penalty in cases where such goods are transported in contravention of the provisions of the CGST Act or the rules made thereunder. It has been informed that proceedings under section 129 of the CGST Act are being initiated for every mistake in the documents mentioned in para 3 above. It is clarified that in case a consignment of goods is accompanied by an invoice or any other specified document and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated.

5. Further, in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:

a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;

b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;

c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;

d) Error in one or two digits of the document number mentioned in the e-way bill;

e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;

f) Error in one or two digits/characters of the vehicle number.

6. In case of the above situations, penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for every consignment. A record of all such consignments where proceedings under section 129 of the CGST Act have not been invoked in view of the situations listed in paragraph 5 above shall be sent by the proper officer to his controlling officer on a weekly basis.”

17. In view of above circular, it is clear that the minor errors, which are of its some examples are given in para-5 are required to be dealt with by imposing penalty of Rs.500/- under Section 125 of the GST Act and Rs.1,000/- under the IGST Act. The respondent no.2 has not disputed the fact that the chassis number of the vehicle is different than that of what is mentioned in the invoice and the e-way bill number. Even the transport receipt number is also mentioned in e-way bill is also the same.

18. This Court in case of Shree Govind Alloys Pvt. Ltd. vs. State of Gujarat, dated 01.12.2022 rendered in Special Civil Application No.23835 of 2022 has held as under:-

“9. This Court in Govind Tobacco Manufacturing Co. vs. State of U.P., [2022] 140 taxmann.com 383 (Ahhahabad) has held that as there is expiry of e-Way bill on transit, the seizure of said vehicle and the goods is not permissible under the law. In the case before the High Court of Madhya Pradesh at Jabalpur in M/s. Daya Shaker Singh vs State of Madhya Pradesh passed in Writ Petition No.12324 of 2022 on 10.08.2022, where also the Court had intervened considering the fact that the respondent could not establish any element of evasion of tax with fraudulent intent or negligence on the part of the petitioner. Delay was of almost 4 ½ hours before the eWay bill could expire. It appeared to be bona fide and without establishing any fraudulent intention. Here also what is found is that there is no fraudulent intention for this to happen.”

19. Therefore, in the facts of the present case, the impugned order of demanding tax and penalty in Form GST MOV-09 is without jurisdiction as the respondent no.2 could not have detained vehicle on the ground of invalid e-way bill. The impugned order dated 14.01.2020 demanding the total tax of Rs.18,74,972/- and total penalty of the equal amount under clause (a) of sub-Section (1) of Section 129 of the GST Act is hereby quashed and set aside and the amount if any deposited by the petitioner, is ordered to be refunded forthwith. Rule is made absolute to the aforesaid extent. No order as to costs.

Sd/-
(BHARGAV D. KARIA, J)

Sd/-
(NIRAL R. MEHTA,J)