2019 (10) TMI 480 - HC - GST

Court directs release of detained conveyance under Central Goods and Services Tax Act

The court ruled in favor of the petitioner, directing the release of the detained conveyance and its contents. The judgment emphasized the significance of ... Procedure for inspection under the GST e-way bill regime - requirement of Form GST MOV-02, Form GST MOV-04 and recording in Part A/B of Form GST EWB-03 - detention under section 129 of the CGST Act - release order in Form GST MOV-05 - issuance of Form GST MOV-06Procedure for inspection under the GST e-way bill regime - requirement of Form GST MOV-02, Form GST MOV-04 and recording in Part A/B of Form GST EWB-03 - detention under section 129 of the CGST Act - release order in Form GST MOV-05 - Whether the order detaining the conveyance under section 129 of the CGST Act is sustainable where the person in charge produced invoice and e-way bill but no report of physical verification (Form GST MOV-04) or final report (Part B of Form GST EWB-03) has been prepared/uploaded as required by the Board's circular. - HELD THAT: - The court noted that the person in charge of the conveyance had produced both the tax invoice and the e-way bill at the time of interception and that, under the Board's circular dated 13.4.2018, where prima facie no discrepancies are found the conveyance must be allowed to proceed. The circular prescribes that after issuance of Form GST MOV-02 the proper officer must prepare and upload a report in Part A of Form GST EWB-03 within 24 hours, and, upon completion of physical verification, prepare Form GST MOV-04 and record the final inspection report in Part B of Form GST EWB-03 within three days; if no discrepancies are found the officer shall issue a release order in Form GST MOV-05. In the present case the respondents could not produce Form GST MOV-03 or Form GST MOV-04 nor show that any report was uploaded on the common portal, and instead issued Form GST MOV-06 detaining the goods. Having regard to these omissions and the production of requisite documents by the person in charge, the court concluded that the detention order, prima facie, does not comply with the procedure mandated by the Board and is therefore not sustainable. [Paras 4, 5]The detention order under section 129 of the CGST Act is prima facie unsustainable; respondents directed to forthwith release the conveyance and goods as interim relief.Final Conclusion: Rule issued and made returnable; interim direction granted for immediate release of the vehicle and goods for non-compliance with prescribed inspection and reporting procedure under the Board's circular. Issues involved:1. Interpretation of Circular No.41/15/2018-GST and Circular No.64/38/2018-GST regarding the procedure for inspection and detention of goods under the Central Goods and Services Tax Act, 2017.2. Compliance with the procedural requirements outlined in the circulars for physical verification and inspection of goods and conveyance.3. Validity of the detention order issued under section 129 of the CGST Act without following the prescribed procedure.Analysis:Issue 1: Interpretation of CircularsThe petitioner relied on Circular No.41/15/2018-GST, emphasizing the requirement for the proper officer to conclude inspection proceedings within three days of issuing Form GST MOV-02, and to issue a release order if no discrepancies are found. The petitioner argued that no discrepancies were identified, necessitating the release of the conveyance. Reference was also made to Circular No.64/38/2018-GST, stating that if goods are accompanied by the necessary documents, proceedings under section 129 of the CGST Act should not be initiated. The absence of discrepancies in the invoice and e-way bill was highlighted to support the contention that detention was unwarranted.Issue 2: Compliance with Procedural RequirementsThe petitioner contended that the proper officer failed to follow the prescribed procedure outlined in the circulars. While the person in charge of the conveyance produced the required documents, no reports of physical verification were served or uploaded on the common portal as mandated. The petitioner argued that the officer directly issued an order of detention without adhering to the procedural steps, indicating non-compliance with the circular's provisions.Issue 3: Validity of Detention OrderThe Assistant Government Pleader acknowledged the absence of reports post-verification, indicating non-compliance with legal provisions and circular instructions. The court observed that since no discrepancies were found after detaining the vehicle and no physical verification report was submitted, the detention order under section 129 of the CGST Act lacked sustainability. Consequently, the court directed the release of the conveyance and its contents, considering the procedural lapses and absence of grounds for detention.In conclusion, the judgment underscores the importance of adhering to procedural requirements outlined in circulars governing the inspection and detention of goods under the CGST Act. Non-compliance with these procedures can render detention orders unsustainable, as evidenced in this case where the absence of discrepancies and procedural lapses led to the release of the detained conveyance.