2018 (5) TMI 455 - HC - GST

Incomplete Vehicle Number on E-Way Bill Doesn't Justify Seizure If No Tax Evasion Intent Found Under GST Rules

The HC held that the petitioner did not exhibit any intention to evade tax despite Part-B of the e-way bill being incomplete regarding the vehicle number. ... Requirement of information in Part B of FORM GST EWB 01 for validity of e way bill - Rule 138(3) proviso - exemption for furnishing conveyance details where goods moved upto 50 kilometres to transporter - seizure under Section 129(1) of the UPGST Act, 2017 for alleged irregularity in e way bill - obligation to consider documentary evidence and to pass a reasoned order before detention/seizure - absence of mens rea or intention to evade tax where IGST is shown on invoiceRule 138(3) proviso - exemption for furnishing conveyance details where goods moved upto 50 kilometres to transporter - requirement of information in Part B of FORM GST EWB 01 for validity of e way bill - Applicability of the proviso to Rule 138(3) to the facts and whether the petitioner was obliged to fill Part B of the e way bill before handing goods to the transporter. - HELD THAT: - The Court examined the substituted Rule 138(3) (Notification No.12/2018-Central Tax dated 07.03.2018) and its proviso which exempts the supplier from furnishing conveyance details in Part B where goods are transported for a distance of upto fifty kilometres from the place of business of the consignor to the place of business of the transporter for further transportation. Applying that provision to the material on record, the Court found that the goods were being transported from the supplier to the transporter for onward carriage and that the Part B details (vehicle number) were not available to the supplier at the time of generation of the e way bill because the onward vehicle particulars were to be determined by the transporter. In those circumstances, the Court held that the supplier was not obliged to fill Part B before handing over the goods to the transporter and that mere non mentioning of the vehicle number in Part B did not render the e way bill invalid where the proviso applied.The proviso to Rule 138(3) applied and the petitioner was not legally obliged to fill Part B under the facts; non filling of Part B in those circumstances did not justify seizure.Seizure under Section 129(1) of the UPGST Act, 2017 for alleged irregularity in e way bill - obligation to consider documentary evidence and to pass a reasoned order before detention/seizure - absence of mens rea or intention to evade tax where IGST is shown on invoice - Legality of the detention/seizure order passed under Section 129(1) and the consequential show cause notice under Section 129(3) where Part B was unfilled but all other documents accompanied the consignment and IGST was shown in the invoice. - HELD THAT: - On consideration of the interception memo, the physical verification report and the documents produced by the petitioner, the Court concluded there was no evidence of intention to evade tax - the tax (IGST) was shown on the invoice and requisite documents accompanied the goods. The authority had not engaged with the petitioner's material nor assigned reasons in the impugned order for seizure and for imposing penalty; the respondent also failed to consider the applicable Notification dated 07.03.2018. The Court held that detention and seizure could not be sustained where the statutory proviso applied and where no reasoned assessment of the documentary evidence was made. Consequently, the seizure order and consequential show cause notice were legally unsustainable.The seizure order dated 09.04.2018 and the consequential show cause/penalty notice dated 09.04.2018 were quashed and the respondents directed to release the goods and vehicle forthwith.Final Conclusion: The writ petition is allowed: the court held that the proviso to Rule 138(3) exempted the supplier from filling Part B in the given factual matrix and that the detention/seizure without a reasoned consideration of the petitioner's documentary evidence was illegal; the seizure and show cause notice were quashed and the goods and vehicle ordered to be released forthwith. Issues:1. Validity of e-way bill and filling of Part-B.2. Seizure of goods and penalty under Section 129 of the UPGST Act, 2017.3. Interpretation of Notification No.12/2018 dated 07.03.2018 regarding e-way bill requirements.Analysis:1. The petitioner, a private limited company engaged in industrial supply, exported stainless steel welded pipes with an IGST charge of 18%. The goods were intercepted during transportation due to an allegedly incomplete e-way bill. The petitioner argued that the e-way bill was valid for the purpose of transportation to the consignee and that Part-B was not required to be filled before loading. The respondent issued a seizure order and penalty notice under Section 129(1) of the Act, claiming irregularity in the e-way bill. The petitioner contended that the seizure was an abuse of process, as all necessary details were provided, and there was no intention to evade tax.2. The respondent, while acknowledging the presence of all required documents, insisted on the importance of filling Part-B of the e-way bill. The court examined the relevant documents and found no malicious intent on the petitioner's part. It held that the seizure order lacked justification, as the petitioner had complied with the necessary documentation. The court emphasized that the respondent failed to consider the petitioner's arguments and the provisions of the notification dated 07.03.2018. Consequently, the court quashed the seizure order and penalty notice, directing the release of the goods and vehicle.3. The court analyzed Notification No.12/2018 dated 07.03.2018, specifically Rule 138(3) third proviso, which exempts the furnishing of conveyance details in Part-B for transportation within a 50 km distance. The petitioner relied on this provision to support its claim that filling Part-B was not mandatory before loading the goods. The court agreed with the petitioner's interpretation of the notification, emphasizing that the petitioner acted in accordance with the law and should not be penalized for a technicality. The court's decision to quash the seizure order was based on the petitioner's compliance with legal requirements and the absence of any fraudulent intent.