2019 (11) TMI 711 - HC - GST

Court quashes detention of truck under GST Act Section 129, citing unjustified grounds.

The court found the detention of the truck with goods under Section 129 of the GST Acts unjustified, as it was based on extraneous grounds not required by ... Detention and seizure under section 129 of the CGST Act - Documents required during movement of goods - invoice and e-way bill (Rule 138A) - Binding nature of Board instructions and circulars issued under section 168 - Prohibition on supplementing statutory orders by subsequent affidavits - Specification of top five goods in FORM GST REG-01 is informational and not a bar on supply of other goodsDetention and seizure under section 129 of the CGST Act - Documents required during movement of goods - invoice and e-way bill (Rule 138A) - Binding nature of Board instructions and circulars issued under section 168 - Legality of detention of conveyances under section 129(1) when invoice and e-way bill, as required under rule 138A, were produced and no inspection was carried out - HELD THAT: - The Court found that rule 138A mandates that the person in charge must carry the invoice and a copy or number of the e way bill, and both documents were produced when the conveyances were intercepted. The Board's Circular laying down the procedure for interception, verification, physical inspection and consequent detention is binding on officers under section 168. The record showed no FORM GST MOV 02, no Part A upload of FORM GST EWB 03, no FORM GST MOV 04 and no Part B upload of FORM GST EWB 03, indicating that no physical inspection was undertaken but only document verification was contemplated. The Circular requires that where prima facie no discrepancy is found on verification of the prescribed documents, the conveyance shall be allowed to proceed; detention under section 129(1) could not therefore be justified on the extraneous ground that the lorry receipt was a photocopy lacking a computerised serial number and contact details, a document not required by statute to be produced. Consequently the detention order and the notices demanding tax and penalty under section 129 were unsustainable. [Paras 16, 17, 18, 28, 29]Detention under section 129(1) quashed as illegal; conveyances could not be detained when invoice and e way bill required by rule 138A were produced and no statutory inspection procedure was followed.Prohibition on supplementing statutory orders by subsequent affidavits - Permissibility of relying on additional grounds raised for the first time in the respondents' affidavit to sustain an order of detention - HELD THAT: - The Court applied the settled principle that the validity of a statutory order must be judged by the reasons stated in the order itself and cannot be supplemented by fresh grounds in subsequent affidavits or pleadings. The respondents attempted to rely on new grounds in their affidavit (non disclosure of commodity in registration and a purported driver statement) which were not reflected in the original detention order; such after thought grounds cannot validate an order which is otherwise bad on its face. Even examined on merits, the additional grounds lacked statutory basis as explained elsewhere in the judgment. [Paras 6, 19, 20, 29]Respondents cannot sustain the detention order by advancing new grounds in affidavit; such supplementation is impermissible and does not cure the invalidity of the order.Specification of top five goods in FORM GST REG-01 is informational and not a bar on supply of other goods - Amendment of non core registration fields (REG-14) and effect thereof - Whether transporting goods not specified in Part B (column 18) of FORM GST REG-01 renders the transport unlawful or justifies detention - HELD THAT: - Part B, column 18 of FORM GST REG 01 requires disclosure of the top five goods with HSN codes but does not prohibit supply of goods other than those listed. The Court held that specification is for information and many suppliers deal in more than five goods. Amendment of registration to add goods is a change in a non core field under rule 19 and FORM GST REG 14, which does not require prior approval of the proper officer. Consequently, mere non listing of the transported goods in REG 01 did not constitute a statutory contravention warranting detention, particularly where the invoice and e way bill correctly described the goods and the correct tax rate was applied. [Paras 24, 25, 26, 27, 28]Failure to mention the goods in FORM GST REG 01 does not amount to contravention justifying detention; amendment thereafter is a non core change and does not validate detention.Final Conclusion: The impugned orders of detention dated 2.4.2019 and the notices under section 129(3) are quashed and set aside: detention was contrary to rule 138A and binding Board instructions, subsequent affidavit grounds cannot validate the order, and non specification of goods in REG 01 did not justify detention. Issues Involved:1. Legality of detention/seizure under Section 129 of the GST Acts.2. Compliance with procedural requirements under the GST Acts.3. Validity of grounds for detention (photocopy of transport receipt and handwritten details).4. Relevance of subsequent grounds raised in the affidavit-in-reply.5. Applicability of Circular No. 64/38/2018-GST dated 14.9.2018.6. Requirement of GST registration for specific commodities.7. Legal implications of driver's statements regarding the destination of goods.Detailed Analysis:1. Legality of Detention/Seizure under Section 129 of the GST Acts:The petitioner argued that the detention/seizure of the truck with goods under Section 129 of the GST Acts was 'wholly without jurisdiction, arbitrary and illegal.' The petitioner had complied with all procedural requirements, including the preparation of a tax invoice, generation of an e-way bill, and possession of a transport receipt. The court noted that the truck was detained on the grounds that the transport receipt was a photocopy and had handwritten details, which were not stipulated as mandatory under the GST Acts.2. Compliance with Procedural Requirements under the GST Acts:The petitioner had complied with the procedural requirements for the movement of goods under the GST Acts, including the preparation of the tax invoice, generation of the e-way bill, and possession of the transport receipt. The court found that the petitioner had adhered to the necessary procedures and that the detention was based on extraneous grounds not required by the statute.3. Validity of Grounds for Detention (Photocopy of Transport Receipt and Handwritten Details):The court found that the detention of the truck on the grounds that the transport receipt was a photocopy and had handwritten details was not justified. The GST Acts did not prescribe any specific format for the transport receipt, and the petitioner had explained that it was common practice to send scanned copies of the transport receipt, which were then filled and signed by the authorized representative of the transporter. The court held that there was no breach of the GST Acts in this regard.4. Relevance of Subsequent Grounds Raised in the Affidavit-in-Reply:The respondents raised new grounds in their affidavit-in-reply, including that the petitioner had not obtained GST registration for the commodities being transported and that the driver had stated that the goods were being transported from Sihor to Aurangabad. The court, citing the Supreme Court's decision in Mohinder Singh Gill v. Chief Election Commissioner, held that the validity of an order must be judged by the reasons mentioned in the order itself and cannot be supplemented by fresh reasons in the affidavit. The court found these additional grounds to be irrelevant and not permissible for consideration.5. Applicability of Circular No. 64/38/2018-GST dated 14.9.2018:The petitioner referred to Circular No. 64/38/2018-GST, which provided that proceedings under Section 129 of the CGST Act should not be initiated in certain situations, such as minor errors in the invoice or e-way bill. The court noted that the instructions issued by the Central Board of Indirect Taxes and Customs under Section 168 of the CGST Act are binding on the officers and must be followed. The court found that the detention was contrary to the instructions in the circular.6. Requirement of GST Registration for Specific Commodities:The respondents contended that the petitioner was not registered for the commodities being transported. The court found that the GST registration form (FORM GST REG-01) only required the top five commodities to be specified and that there was no provision mandating registration for each specific commodity. The court held that the petitioner was not in breach of any provision of the GST Acts by transporting goods not specified in the registration form.7. Legal Implications of Driver's Statements Regarding the Destination of Goods:The respondents relied on the driver's statement that the goods were being transported from Sihor to Aurangabad. The court noted that the statutory form (FORM GST MOV-01) recorded the driver's statement that the goods were being transported from Bhavnagar to Virar, Thane. The court found that the destination of the goods had no bearing on the tax liability provided the destination was outside the State of Gujarat. The court held that the driver's statement did not justify the detention of the goods.Conclusion:The court concluded that the detention of the truck with goods under Section 129 of the GST Acts was not justified and was based on extraneous grounds not required by the statute. The court quashed the impugned orders of detention and notices issued under Section 129 of the GST Acts and allowed the petitions.