2025 (9) TMI 1337 - HC - GST

Petition dismissed; detention of goods upheld as driver's contemporaneous loading statement unrebutted and signatures not shown forged

M/s Aasar Scrap Traders Versus State Of U.P. And 2 Others

HC dismissed the petition, upholding detention of goods. Court found the driver's contemporaneous statement that goods were loaded at the Iglass godown ... Detention of goods - proper basis to detain goods present or not - seizure of the goods were made on the premise of availing wrongful ITC - HELD THAT:- It is not in dispute that at the time of interception, the driver of the vehicle made a categorical statement that the goods were loaded at the godwon situated at Iglass on 16.08.2022 from morning to evening and after the goods were loaded, the same directly moved from Aligarh By-pass to Bulandshahar to Meerut. The driver also categorically stated that no goods were ever loaded and transported from Aligarh to Iglass. In view of the said fact, the document prepared and presented that the goods moved from Aligarh to Iglass is of no help to the petitioner. The statement of the driver has not been challenged at any stage, nor before this Court in any of the paragraphs of the writ petition. Further, no material has been brought on record to show that the statement of the driver was made under duress or otherwise. It is not the case of the petitioner that the signature of the driver was obtained on plain paper and thereafter, the contents have been filled up. Once the statement of the driver was not rebutted at any stage, the impugned orders cannot said to be arbitrary. The statement of the driver made at the first instance should be given more sanctity than the explanation furnished at a later stage. In absence of any rebuttal by the petitioner that the statement of the driver was made in duress or otherwise, the statement given by the driver at the first instance has more value than the explanation furnished at a later stage. Therefore, the judgement relied upon by the petitioner in M/s Ghata Mehandipur Balaji Grinding Works Private Limited [2014 (3) TMI 1241 - ALLAHABAD HIGH COURT] is of no help to the petitioner. In absence of any rebuttal by the petitioner that the statement of the driver was made in duress or otherwise, the statement given by the driver at the first instance has more value than the explanation furnished at a later stage. Therefore, the judgement relied upon by the petitioner in M/s Ghata Mehandipur Balaji Grinding Works Private Limited is of no help to the petitioner. Thus, no interference is called for in the impugned orders - petition dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether detention and seizure of goods intercepted by the Mobile Squad were justified where the driver's contemporaneous statement contradicted the documentary route and invoices. 2. Whether the driver's first-instance oral statement recorded in MOV-01 and MOV-04 is entitled to greater evidentiary weight than subsequently furnished documents and explanations by the owner/consignee. 3. Whether detention/seizure on the premise of alleged wrongful availing of Input Tax Credit (ITC) was made on mere presumption, surmise or conjecture such as to render the impugned orders arbitrary. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Justification for detention and seizure where driver's contemporaneous statement contradicted documentary route Legal framework: The statutory scheme permits interception of vehicles and recording of statements (MOV-01) and physical verification reports (MOV-04) by enforcement authorities to determine compliance with tax laws, and to take action including detention/seizure where records and oral statements indicate non-genuine movement or diversion of goods. Precedent Treatment: The Court applied the principle recognized in prior decisions that contemporaneous statements made at the point of interception bear significant evidentiary value; such precedents were followed rather than overruled. Interpretation and reasoning: The driver, at the time of interception, stated that goods were loaded at a specific godown on 16.08.2022 and that no goods had been transported from the earlier-disclosed origin to that godown. This direct, contemporaneous account contradicted the documents presented showing movement from the earlier origin. The Court held that where oral statement at first instance demolishes the documentary narrative of origin and movement, the documents asserting a different route are of no help to the petitioner. Ratio vs. Obiter: Ratio - contemporaneous statements that directly contradict documentary claims can substantiate detention/seizure and support assessment/actions by tax authorities. Obiter - none material to this point beyond emphasis on factual weight of such statements. Conclusions: Detention and seizure were justified on the facts because the driver's unchallenged first-instance statement negated the documentary route and supported the authority's conclusion of irregularity in movement of goods. Issue 2 - Evidentiary weight of the driver's first-instance statement versus later explanations/documents Legal framework: Evidentiary principles under tax/enforcement procedure afford substantial weight to statements recorded at the time of interception; such statements are admissible and relevant in assessing genuineness of consignment movement and claims under GST law. Precedent Treatment: The Court expressly followed earlier authority holding that a driver's statement taken at the point of interception has greater sanctity than explanations and documents produced later (precedent followed). Interpretation and reasoning: The Court reasoned that the driver's contemporaneous statement was neither challenged nor shown to be obtained under duress; no evidence was produced to suggest fabrication or coercion. There was no plea that the signature was obtained on blank sheets subsequently filled in. Absent such rebuttal, the first-instance statement must be preferred to later-produced documentary explanations, which may be self-serving and susceptible to post hoc fabrication. Ratio vs. Obiter: Ratio - where a first-instance driver's statement is unchallenged and not shown to be under duress, it outweighs subsequent documentary explanations and can validly support enforcement action. Obiter - observations on potential modes of challenging such statements (e.g., proof of duress) are ancillary. Conclusions: The driver's statement was accorded decisive evidentiary weight; because it remained unrebutted, it validated the impugned orders and rendered the petitioner's later explanations insufficient to overturn detention/seizure. Issue 3 - Whether detention on premise of alleged wrongful ITC was mere presumption/surmise making the orders arbitrary Legal framework: Enforcement action for alleged wrongful availing of ITC requires objective material indicating non-genuine transactions or diversion; however, reasonable inferences drawn from contemporaneous statements and physical verification reports can justify detention and penalties if they demonstrate irregularities. Precedent Treatment: The Court distinguished authorities relied upon by the petitioner where detention was set aside for lack of substantive material, indicating those were not factually on all fours with the present case; instead, the Court relied on precedent confirming primacy of first-instance statements. Interpretation and reasoning: The petitioner contended that detention was based on presumption and conjecture. The Court rejected that contention because there existed direct factual material - the driver's unequivocal statement and the physical verification report - that contradicted the documentary trail and gave objective basis for suspicion of irregularity (including potential wrongful ITC). In absence of any rebuttal showing the driver's statement was procured by coercion or fabricated, the impugned orders could not be characterized as arbitrary. Ratio vs. Obiter: Ratio - detention/seizure founded on contemporaneous evidence indicating divergence between documents and actual movement is not mere conjecture and does not render an order arbitrary. Obiter - the Court's brief reference to the inapplicability of the petitioner's cited authority is explanatory. Conclusions: The detention/seizure and consequential tax/penalty orders were not based on mere presumption or conjecture; they rested on uncontroverted contemporaneous factual material and thus did not warrant interference. Cross-references and final holding Cross-reference: Issues 1-3 are interlinked - the validity of detention/seizure and assessments for alleged wrongful ITC (Issue 3) depended on the evidentiary primacy of the driver's first-instance statement (Issue 2) which directly contradicted documentary assertions about movement (Issue 1). Final conclusion: The Court upheld the impugned orders, finding the authorities acted on contemporaneous, unrebutted factual material (driver's statement and physical verification), and therefore decline[d] to interfere with detention, seizure, tax and penalty imposed.