2018 (6) TMI 1265 - HC - GST

Kerala High Court: Release of Goods under CGST Act, Bond & Bank Guarantee Required

The High Court of Kerala set aside an interim order in a case involving the transportation of goods under the CGST Act. The Court directed the release of ... Detention of goods - E-way bill not produced - Evasion of duty or not - Held that:- The goods were transported on payment of tax; but, however, the dealer intends to re-sell the goods from his dealership. In such circumstances, suspicion of evasion cannot be brushed aside at this stage. The interim order set aside and goods released on execution of a simple bond for the value of goods in the prescribed form and furnishing of security in the form of Bank Guarantee equivalent to the amount of applicable tax and penalty payable as has been demanded in Exhibits P17 and P18 orders. Appeal disposed off. Issues:Interpretation of CGST Act regarding transportation of goods with respect to E-way bills and tax evasion suspicion.Analysis:The High Court of Kerala heard an appeal challenging an interim order passed by a learned Single Judge regarding the transportation of goods under the Central Goods and Service Tax Act, 2017 (CGST Act). The respondents, who were dealers under the CGST Act, were transporting goods from one place to another, accompanied by invoices for both the goods and the service provided. The issue arose regarding the uploading of E-way bills as per Rule 138 of the CGST Rules, which the Department required for notification of purchase and movement to prevent evasion. The Single Judge found similarities with a previous case but noted a distinction in the present case concerning the intention to resell the goods, raising suspicion of evasion.In the previous case, the transport was not taxable due to specific circumstances, and the authenticity of the delivery challan was not in question, leading to no suspicion of tax evasion. However, in the current case, although the goods were transported after tax payment, the dealer planned to resell them, creating a potential for evasion. The Single Judge had directed the payment of a specific amount and the furnishing of bonds, which the High Court found unsustainable based on the provisions. The High Court refrained from making a definitive statement on this issue, allowing the Single Judge to further examine the matter.Consequently, the High Court set aside the interim order and directed the release of the goods upon the execution of a simple bond for the goods' value and the provision of security in the form of a Bank Guarantee for the applicable tax and penalty amounts demanded. The Writ Appeal was disposed of, leaving the remaining questions to be addressed in the ongoing writ petition.