2025 (3) TMI 555 - HC - GST

Goods found at wrong destination with incomplete challan violates Rule 55, Section 129 tax penalty upheld

M/s Famus India Versus State of U.P. And 3 Others

The Allahabad HC dismissed a petition challenging tax and penalty levy under Section 129 of the GST Act. The petitioner's goods were found at a different ... Levy of tax and penalty u/s 129 of GST Act - contravention of the provisions prescribed under Rule 45 and 55 of the GST Rules or not - goods in question were found at different destination from the destination mentioned in the accompanying documents - HELD THAT:- There is requirement for issuing a challan for the goods send to job work. Rule 55 provides that challan should be issued or in duplicate and duly filled in prescribed format. Learned ACSC has produced a photocopy of challan issued by the petitioner (which is not disputed by the counsel for the petitioner) and on perusal of the same, it shows that various descriptions as required under Rule 55 of the Rules are not mentioned on it and the same was incomplete. Once various requirements as contemplated under the Rules were not complied with, which demonstrates the contravention of Rules 55, therefore, the proceeding under Section 129 of the GST Act cannot be said to be arbitrary. Conclusion - The petitioner's failure to provide a complete challan as required by Rule 55 constituted a violation of the GST Rules, thereby justifying the imposition of tax and penalty under Section 129. Petition dismissed. ISSUES PRESENTED and CONSIDEREDThe primary legal question considered was whether the petitioner violated the provisions of the UP GST Act and the related GST Rules, specifically Rules 45 and 55, by transporting goods without the necessary documentation, thereby justifying the imposition of tax and penalty under Section 129 of the GST Act.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe case revolves around the interpretation and application of Section 129 of the UP GST Act, which allows for the detention and seizure of goods in transit if they are found to be in contravention of the Act or the rules made thereunder. The relevant rules in question are Rule 45 and Rule 55 of the GST Rules. Rule 45 outlines the conditions and restrictions for sending inputs and capital goods to a job worker, requiring a duly filled challan. Rule 55 specifies the details that must be included in a delivery challan when goods are transported without an invoice.Court's Interpretation and ReasoningThe Court examined the requirements under Rules 45 and 55, noting that a challan must accompany goods sent to a job worker. The Court emphasized that the challan must contain specific details as outlined in Rule 55, such as date, number, GSTIN of the consigner, and consignee, description of goods, and other relevant information.Key Evidence and FindingsThe petitioner argued that the goods were accompanied by proper documentation and were sent to a job worker, not to the business premises, thus no violation occurred. However, the respondent contended that the challan provided by the petitioner was incomplete and did not meet the requirements specified in Rule 55. The Court found that the challan lacked several necessary details, demonstrating a contravention of the GST Rules.Application of Law to FactsThe Court applied the provisions of Rule 55 to the facts, finding that the petitioner's failure to provide a complete challan constituted a breach of the GST Rules. This justified the detention and penalty proceedings under Section 129 of the GST Act.Treatment of Competing ArgumentsThe petitioner relied on a previous judgment, arguing that the proceedings were arbitrary. However, the Court found that the specific circumstances of the case, particularly the incomplete challan, distinguished it from the precedent cited. The respondent's argument regarding the necessity of compliance with the GST Rules was upheld.ConclusionsThe Court concluded that the petitioner failed to comply with the GST Rules, particularly Rule 55, by not providing a complete challan. Therefore, the proceedings under Section 129 were justified, and the petition lacked merit.SIGNIFICANT HOLDINGSThe Court held that compliance with the GST Rules, particularly the issuance of a complete challan as per Rule 55, is mandatory when transporting goods to a job worker. The failure to comply with these requirements constitutes a contravention of the GST Act, justifying the detention and penalty proceedings under Section 129.Core Principles EstablishedThe judgment reinforces the principle that strict adherence to the procedural requirements under the GST Rules is essential for the lawful transportation of goods. The decision underscores the importance of complete and accurate documentation in preventing arbitrary detention and penalties.Final Determinations on Each IssueThe Court determined that the petitioner's failure to provide a complete challan as required by Rule 55 constituted a violation of the GST Rules, thereby justifying the imposition of tax and penalty under Section 129. Consequently, the writ petition was dismissed for lack of merit.