2022 (3) TMI 682 - HC - GST

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

M/s Raghav Metals Versus State of Haryana and others

The HC quashed proceedings under Section 129 of Haryana/Central GST Act against a copper wire business whose goods were detained during transit to ... Detention of goods - Intention to evade tax (GST) - Discrepancies noticed after physical verification of goods and conveyance - Section 129 of the Haryana GST Act, 2017/Central GST Act, 2017 - HELD THAT:- From perusal of the e-Invoice (Annexure P-4/A) it is clear that quantity of consigned goods is shown to be 10430.7 kilograms. An amount of ₹ 1276717.68/- has been paid as tax on the consignment whereas as per the State, it was 10520 kilograms. The said difference in weight is less than 1%. As per State, the alleged evasion shall not be more than ₹ 11000/-. It cannot be said that the petitioner had any intent to evade the tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act. A person, who has already paid a tax of ₹ 1276717.68/- on a consignment cannot be said to have an intent to evade tax amounting to ₹ 11000/-. At this stage, Mr. Goyal states that the petitioner is ready to pay even the tax and penalty imposed by the State-Authorities which comes to be around ₹ 22000/-. Petition allowed. 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.