2021 (8) TMI 1179 - HC - GST

High Court Orders Immediate Release of Detained Machinery; Emphasizes Compliance, Balance, and Provisional Release

The High Court ordered the immediate release of machinery detained at a check post due to tax and e-way bill issues. The Court found that the petitioner ... Release of seized goods pending assessment - power to provisionally release goods under GST regime - distinction between deliberate tax evasion and technical defects - validity of e-way bill and delay caused by third party obstruction - undertaking as condition for provisional releaseRelease of seized goods pending assessment - validity of e-way bill and delay caused by third party obstruction - Detention of the transport vehicle and the excavator was not justified and the machinery should be released forthwith. - HELD THAT: - The Court found on the materials that the petitioner had collected IGST on the sale as declared in the invoice and there was no allegation or proof that the tax collected had not been deposited with revenue. The vehicle reached the check post within the e way bill validity but was delayed by action of the transport authorities who detained the vehicle on a motor vehicle registration ground and imposed a fine; that detention caused the e way bill to expire through no fault of the petitioner. A fresh e way bill was generated but the GST authorities refused to accept it. In these circumstances, permitting continued detention of the machinery would be disproportionate: the defect was technical, not indicative of deliberate tax evasion, and continued detention risked deterioration of the machinery and serious hardship to the purchaser. The Court noted that under the GST scheme tax authorities possess power to release goods provisionally pending assessment and that such power ought to be exercised in appropriate cases like the present.The respondents are directed to release the transport vehicle and the machinery forthwith.Power to provisionally release goods under GST regime - undertaking as condition for provisional release - Release is ordered on conditions: filing of an undertaking by the petitioner, time to respond to the show cause notice, and direction to the Assessing Officer to conclude assessment bearing in mind the Court's observations. - HELD THAT: - The Court required a prudential condition to protect revenue while permitting immediate release. The petitioner must file an undertaking sworn by the branch Manager or a Director undertaking that if any tax or penalty liability is crystallized after final assessment (subject to appellate rights), the petitioner will deposit the same. The petitioner was granted a limited period to file a reply to the show cause notice, and the Assessing Officer was directed to pass the final assessment order in the matter taking into account the observations made by the Court. These directions implement provisional release consistent with the distinction between technical non compliance and deliberate evasion while preserving the revenue's right to recover any finally determined liability.Release is conditioned upon filing the specified undertaking within one week; the petitioner is permitted time to reply to the show cause notice up to the date specified by the Court; and the Assessing Officer shall pass the final order of assessment accordingly.Final Conclusion: The petition is disposed of by ordering immediate release of the detained vehicle and machinery subject to the petitioner filing the prescribed undertaking, allowing time to reply to the show cause notice, and directing the Assessing Officer to decide the assessment thereafter. Issues:Release of detained machinery at check post due to tax and e-way bill issues.Analysis:The petitioner, a company dealing in TATA Hitachi Construction Machinery, sold an excavator to a buyer in another state. The machinery was being transported with a valid e-way bill but was detained at a check post in Tripura. The authorities detained the vehicle first for lack of registration in Tripura and later for an expired e-way bill. The petitioner paid a fine, but the GST authorities refused to accept a new e-way bill. The authorities issued a show-cause notice for unpaid tax and penalty. The petitioner approached the High Court seeking release of the machinery.The High Court found that the petitioner had collected and declared the necessary GST on the sale, and there was no dispute regarding tax deposition. The vehicle had a valid e-way bill, which expired due to delays caused by the authorities. The Court noted that the fault was technical, and detaining the machinery would be impermissible. The Court highlighted the substantial tax already paid and the potential harm due to detention, considering the value of the machinery and inconvenience to the buyer. The Court emphasized the distinction between deliberate tax evasion and technical defects, indicating no intent to evade tax in this case.The Court directed the authorities to release the machinery immediately and instructed the petitioner to file an undertaking to deposit any tax or penalty liability upon final assessment. The petitioner was given time to respond to the show-cause notice, and the Assessing Officer was directed to consider the Court's observations while passing the final assessment order. The Court emphasized the provisional release of machinery under the GST regime and the need to exercise such powers in appropriate cases. The judgment balanced the interests of the petitioner, tax authorities, and buyer, ensuring compliance while preventing undue harm due to technical issues.