AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2018 (8) TMI 1142
X X X X Extracts X X X X
X X X X Extracts X X X X
....ader questioned the detention and the concomitant proceedings. 2. The questions are these: (1) What is the remedy available to the trader faced with detention proceedings under Section 129 of the Goods and Services Tax-of the Centre and of the State? (2) Can the Court exercise its discretion to dilute the statutory rigour? Facts in Brief: 3. A registered dealer under both the Central Goods and Services Tax Act (CGST) and Kerala State Goods and Services Act (KSGST), Petitioner Garuda Timber Traders deals in "trading." Garuda wanted to supply timber to its customer in Karnataka. So on 3rd August 2018, it prepared a taxable invoice with forest pass. It also uploaded the e-way bill in the official web-portal. But because of, what Garuda calls, some technical glitches in the GST network, it could not upload part B of the e-way bill. But Garuda took a printout of the e-way bill and began its transportation. 4. On 4th August 2018, the Assistant State Tax Officer (Intelligence) [the ASO] intercepted the vehicle. The ASO obtained the driver's statements and issued Ext. P4, P4 (a) and P4 (B) besides passing the Ext.P5 detention order, alleging that the e-way bill accompanying the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oubles. Stressing the need to have the goods released immediately, pending further adjudication, Sri Nair relies on many decisions: Ashok Leyland Ltd. v. Assistant State Tax Officer (KER), [2018] 53 GSTR 364 (Ker) Dhanswaroopdas vs. Assistant State Tax Officer, [2018] 53 GSTR 99 (Ker) Age Industries (P) Ltd. Vs. Asst. State Tax Officer, Ernakulam, [2018] 53 GSTR 99 (Ker) Ramesh Chand Kannu Mal V. State of U.P. And Others, [2018] 53 GSTTR 270 (All) Raj Iron & Building Materials V. Union of India and Others, [2018] 54 GSTR 127 (All) Rivigo Services Pvt. Ltd V. State of U.P. And Others, [2018] 54 GSTR 147 (All) and SBGC Logistics V. State of U.P. [2018] 54 GSTR 154 (All) Respondents': 10. On the other hand, Dr. Thushara James, the learned Government Pleader, has submitted that Garuda risked violating the law and got caught. According to her, the statutory mandate is unmistakable. Unless the consignor or the transporter has all the documents accompanying the goods, it cannot afford to carry the goods. She has brushed aside as a web of lies the Garuda's defence that it could not upload part B of the e-way bill. 11. Dr. James has taken me through the statutory scheme to hammer h....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a little late. Tentative it was to begin with, but determined it is in this new federal fiscal path. 16. To put the concept in perspective, GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the later stage of value addition. This process makes GST a tax only on value addition at each stage. The consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages. 17. In other words, the focus was shifted from taxable event to destination-based taxation. It avoids the evil of cascading taxation or tax on tax trouble. So goes the motto: One Nation-One Market- One Tax. 18. A nascent enactment in a nebulous field of taxation will have many teething troubles. GST is no exception. In its path to perfection, GST has much dust to settle-legislatively and judicially. These are the days of confusion and cacophony: many views, many interpretations, and many jurisprudential mumblings. 19. The issue before us detention of goods and demand for tax and penalty. The consignor, however, wants interim custody ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....V dealing with inspection, search, seizure, and arrest. Sub-section (6) mandates that the seized goods will be released, on a provisional basis, upon the person's executing a bond and furnishing a security, "in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be." 26. Now, we will examine the regnant rules. Rule 140 of the KSGST Rules deals with bond and security for release of seized goods. The consignor or another person may provisionally get the goods and vehicle released by executing a bond for the value of the goods in FORM GST INS-04 and by furnishing as security bank guarantee for the tax, interest, and penalty payable. Indeed, the Explanation to the Rule holds that "applicable tax" will include the Central Tax and State tax, or Central tax and the Union territory tax and the cess, if any, under GST (Compensation to States) Act, 2017. What are the documents to be carried along with the goods? 27. If the consignor or the consignee transports the goods, either in its own conveyance or a hired one, it may generate an eway bill in FORM GST INS-01, after furnishing informati....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... He quotes Justice Sussman to define the term: "Discretion means the freedom to choose among different possible solutions." Hart and Sacks offered, Barak goes on to observe, a similar definition: "Discretion means the power to choose between two or more courses of action each of which is thought of as permissible." Judicial discretion, then, means the power the law gives the judge to choose among several alternatives, each of them being lawful. This definition assumes, of course, that the judge will not act mechanically, but will weigh, reflect, gain impressions, test, and study. 32. The subject is not one, Barak cautions, in which we must create something out of nothing. Instead, it is necessary, at most, to reorganize the "something" that already exists. Id., p.6 Giving the court discretion to carry out the concretization of the law has, along with its advantages, several drawbacks. These stem primarily from the impossibility of foretelling the outcome of exercising discretion, and, as a result, judicial certainty and the ability to plan for the long term suffer. Id., p.15 33. To put the concept of judicial discretion in perspective, I may quote who else than the irrepress....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enough other material about the transaction. Dhanswaroopdas has thus held that the detention cannot be sustained. 39. In the Age Industries, the petitioner sent a consignment of surgical gloves to three parties for quality appraisal 'on job work basis,' against delivery challans. The goods were detained in transit. Faced with the proceedings under Section 129, the petitioner raised two objections against the detention of goods: The department cannot support detention on the grounds not mentioned in the notice; goods cannot be detained merely for the party's failure to carry the declarations in specified forms. The Court accepted the petitioner's both contentions. 40. In Ramesh Chand Kannu Mal, the Division Bench of Allahabad High Court has examined the issue of detention under Section 138 of the CGST Act. It has found on facts that on the date of interception, the e-way bill system had not been developed. Besides, neither the State of U.P nor the Government of India brought on record, the Court found, any notification prescribing the relevant documents to be carried with the goods. Under those circumstances, the Allahabad High Court set aside the detention. 41. In Raj ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct read with Rule 140 of the CGST Rules. To begin with, a learned Single Judge directed the release of detained goods on the petitioner's paying of 50% of the demanded tax, besides his executing a simple bond. The Department appealed. The Division Bench analysed Section 129 of the then Simultaneous Ordinances. It also noted that Rule 140 permits the authorities to release provisionally the seized goods on the person's executing "a bond for the value of goods in FORM GST INS-04 and furnishing of security in the form of a Bank Guarantee equivalent to the amount of applicable tax, interest, and penalty payable." After referring to both Section 67 (6) of the Act and Rule 140 of the KSGST Rules, the Division Bench observes that there is an effective mechanism for provisional release of goods; so the Courts cannot compel the authorities to stray from that mechanism. Then, it reversed the impugned judgment. 47. In Indus Towers, the question is whether there could be detention and seizure under Section 129 of the Simultaneous Acts, when there is, obviously, no tax liability on the goods. Goods seized, the officer found only a delivery challan with the goods, as provided under Rule 55 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d: If the conditions under the Act and Rules are not complied with, definitely Section 129 operates and confiscation would be attracted. The respondents are entitled to an adjudication, but they would have to prove that in fact there was a declaration made under Rule 138 before the transport commenced. If they do prove that aspect, they would be absolved of the liability; otherwise, they would definitely be required to satisfy the tax and penalty as available under Section 129. We, hence, vacate the judgment of the learned Single Judge and allow the appeal. The vehicle and the goods having been already released unconditionally, further notice shall be issued and the adjudication under sub-section (3) completed; upon which if penalty is imposed, definitely the respondents would have to satisfy the same. 51. In this series, I may finally refer to the latest judgment rendered on 06.08.2018. A learned Division Bench of this Court in Renji Lal Damodaran has followed the same line of the other two judgments. On facts this case and Renji Lal Damodaran are identical; so are on law, too. Their Lordships have ordered the provisional release of the goods on the petitioner's fu....