Copper Wire Business Detention Quashed: Minor Documentation Discrepancy Under Section 129 Not Proof of Tax Evasion Intent

The HC quashed proceedings under Section 129 of Haryana/Central GST Act against a copper wire business whose goods were detained during transit to Rajasthan. While authorities alleged quantity discrepancies between actual goods and documentation suggesting tax evasion, the court found the difference was less than 1% with insignificant tax implications. The court determined this minor mismatch did not indicate intent to evade tax. The petitioner's willingness to pay applicable tax and penalties further influenced the decision. The court ordered refund of any imposed fines/penalties, noting the goods had already been released.

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Issues:
Challenge to action under Section 129 of the Haryana GST Act, 2017/Central GST Act, 2017 for detaining goods.

Analysis:
1. The petitioner, engaged in the business of copper wires and scraps, sold goods to a company in Rajasthan. The goods were detained during transit due to alleged discrepancies, leading to the petitioner questioning the jurisdiction of the authorities under Section 129 of the GST Act.

2. The authorities claimed discrepancies in the goods' quantity compared to the documents presented, including the e-way bill and invoice. The petitioner contested the proceedings as being without jurisdiction and sought their quashing through a writ petition.

3. Upon hearing both parties, it was noted that the issue of bogus purchase by the supplier had been settled in a previous judgment. However, a discrepancy in the actual quantity of goods compared to the invoice and e-way bill was highlighted by the Deputy Advocate General, suggesting an intent to evade tax by showing a lesser quantity.

4. The Court examined the discrepancy in quantity and tax paid by the petitioner, finding that the difference was less than 1% and the alleged evasion amount insignificant. The petitioner expressed readiness to pay the tax and penalty imposed by the authorities.

5. Considering the circumstances, the Court concluded that the mismatch in quantities did not indicate an intent to evade tax warranting action under Section 129. The petitioner's willingness to pay the tax and penalty further supported the decision to quash the proceedings. Any fines or penalties imposed were to be refunded, and since the goods were already released, no further orders were necessary.

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