TaxTMI 
TaxTMI 
2022 (2) TMI 296
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....he petitioner was directed to station the conveyance carrying goods at office of Assistant Commissioner. The petitioner appeared on the date fixed, i.e. 02.09.2021. He was informed that investigation is underway and was asked to appear on 03.09.2021. On 05.09.2021, the petitioner filed reply to GST MOV-02 through e-mail. The petitioner received a communication dated 11.09.2021 whereby he was informed that on verification, it has been found that inward supply to the sellers/suppliers of the petitioner is from one Balbir Enterprises. Said Balbir Enterprises is not having inward supply and is only engaged in outward supply without paying any tax. Thus, the petitioner is liable to be proceeded under Section 130(1) of the PGST/CGST Act, 2017. 3. The petitioner filed present writ petition on 14.09.2021. At the time of preliminary hearing on 16.09.2021, the following order was passed:- "Present petition is directed against the mala fide action of respondent No. 6 (Mr. Arvind Sharma), while exercising jurisdiction as respondent No. 5. It is urged that the vehicle containing a consignment was detained during transit inspite of availability / production of all the required statut....
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....ctions fraudulent and nonexistent. From M/S GUPTA TRADING COMPANY NEW DELHI (GSTIN 07CEHPG4358G1ZH). The dealer is having NIL inward as per the returns filed which means that only invoices are being raised to pass on inadmissible Input Tax Credits. From M/S VARDHAMAN SALES, NEW DELHI (GSTIN07HLLPK27910 D1ZU). That this firm has again shown purchases from M/S Star Enterprises, New Delhi only which clearly indicates at cyclic transactions taking place thereby creating fraudulent Input Tax Credits. Also M/S Vardhaman Sales, Delhi have shown purchases from M/S Saan Enterprises, New Delhi. No tax at any stage has been paid at any of the stage thereby rendering the creation of the input tax credits as fraudulent beyond any doubt. No tax at any stage has been paid by any of the firms across the supply chain does not have any inward supplies. If there are no inward supplies in the hand of the first firm, then what could have been sold across the supply chain Hence, the ITC created, circulated and utilized is fraudulent. ITC IS NON EXISTENT AND FRAUDULENT. 2. M/s. Saan Enterprises, New Delhi 07BGLPD5743F1 ZG The Dealer is having inward supply from M/s STAR E....
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.... R-1 is believed to be gospel truth, petitioner cannot be attributed any intention to evade payment of tax. 10. On the other hand, learned Additional Advocate General, Punjab asserts that the action of the State authorities is in consonance with law. MOV02 was handed over to the petitioner at the time of detention wherein it was specifically spelled that the detention was for verification of the documents tendered. As per her, during investigation, incriminating material was found against the petitioner which suggested evasion of tax at its end. Resultantly, show cause notice issued under Section 130 of the CGST Act, 2017 has been issued. She has further contended that the petitioner needs to respond to the show cause notice issued under Section 130 and the present writ petition is not maintainable. 11. We have heard learned counsel for the parties and perused the paper book. 12. From the pleadings on record, the following two questions arises for the consideration of this Court:- "(1). Whether the present writ petition deserves to be dismissed being not maintainable? (2). Whether the impugned order dated 30.08.2021 and further proceedings under Section 1....
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.... amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments." Thus incidence lays on the recipient of supply. 16. Like every taxation enactment, 2017 Act also has a mechanism on which operates, which is 'input tax credit' defined under Section 2(63). It means credit of 'Input tax' defined under Section 2(62). Section 16, Sections 41, 42 and Section 43A provide for eligibility and conditions for taking input tax credit, claim of input tax credit and provisional acceptance thereof, ....
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....ts and devices prescribed in this behalf. Section 68(2) further provides that the details of documents required to be carried by the person in charge of the conveyance shall be validated in the manner as may be prescribed. Section 68(3) empowers Proper Officer to require the person in charge of conveyance carrying goods to produce the documents for verification. It casts a duty upon the said person to produce the documents and allow the inspection of goods when asked by the Proper Officer. In exercise of the power conferred by Section 164 of the CGST Act, the Central Government notified the Central Goods and Service Tax Rules, 2017. Rule 138 of 2017 Rules govern e-way bills. In case of transportation of goods by road, e-way bill is required to be generated before the commencement of the movement of the consignment. Rule 138A of CGST prescribes the documents and devices to be carried by the person in charge of the conveyance. As per the said provision, person in charge of a conveyance is required to carry the invoice or bill of supply or delivery challan, as the case may be and in case of transportation of goods by road, he is also required to carry copy of e-way bill in physical fo....
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....-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) of sub section (1). (4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of penalty under subsection (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3): Provided that the conveyance shall be released on payment by the transporter of penalty un....
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....ition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government." 20. Section 168 of 2017 Act confers power on the Central Board of Indirect Taxes and Customs to issue orders, instructions or directions to the Central Tax Officers as it may deem fit ....
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....fication Device embedded on to the conveyance in such manner as may be notified by the Commissioner. 1.2 Section 129 of the CGST Act provides for detention, seizure and release of goods and conveyances in transit while section 130 of the CGST Act provides for the confiscation of goods or conveyances and imposition of penalty. 2. In this regard, various references have been received regarding the procedure to be followed in case of interception of conveyances for inspection of goods in movement and detention, seizure and release and confiscation of such goods and conveyances. In order to ensure uniformity in the implementation of the provisions of the CGST Act across all the field formations, the Board, in exercise of the powers conferred under section 168(1) of the CGST Act, hereby issues the following instructions: (a) The jurisdictional Commissioner or an officer authorised by him for this purpose shall, by an order, designate an officer/officers as the proper officer/ officers to conduct interception and inspection of conveyances and goods in the jurisdictional area specified in such order. (b) The proper officer, empowered to intercept and in....
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....ng days and a copy of the order of extension shall be served on the person in charge of the conveyance. (f) On completion of the physical verification/inspection of conveyance and goods in movement, proper officer shall prepare a report of such physical verification in FORM GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance. The proper officer shall also record, on the common portal, the final report of the inspection in Part B of FORM GST EWB-03 within three days of such physical verification/inspection. (g) Where no discrepancies are found after inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in FORM GST MOV-05 and allow the conveyance to move further. Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of CGST Act, he shall issue an order of detention in FORM GST MOV-06 and a notice in FORM GST MOV-07 in accordance with the provisions of sub-section (3) of section 129 of the CGST Act, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance. (....
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.... the electronic credit ledger of the concerned person om accordance with the provisions of section 49 of the CGST Act. (k) In case the proposed tax and penalty are not paid within seven days from the date of issue of the order of detention in FORM GST MOV-06, action under section 130 of the CGST Act shall be initiated by serving a notice in FORM GST MOV-10, proposing confiscation of the goods and conveyance and imposition of penalty. (l) Where the proper officer is of the opinion that such movement of goods is being effected evade payment tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equa....
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.... common order in the said FORM CGST MOV-11. (q) In case neither the owner of the goods nor any person other than the owner of the goods comes forward to make the payment of tax, penalty and fine imposed and get the gods or conveyance released within the time specified in FORM GST MOV-11, the proper officer shall auction the goods and/or conveyance by a public auction and remit the sale proceeds to the account of the Central Government. (r) Suitable modifications in the time allowed for the service of notice or order for auction or disposal shall be done in case of perishable and/or hazardous goods. (s) Whenever an order or proceedings under the CGST Act is passed by the proper officer, a corresponding order or proceedings shall be passed by him under the respective State or Union Territory GST Act and if applicable, under the Goody and Services Tax (Compensations to States) Act, 2017. Further, sub-sections (3) and (4) of section 79 of the CGST Act/respective State GST Acts may be referred to in case of recovery of arrears of central tax/State tax/ Union territory tax. (t) The procedure narrated above shall be applicable mutatis mutandis for an or....
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...., Section 130 can be invoked. Even though the goods have been detained or seized for contravention of provision of the Act under Section 129, if the competent authority finds during investigation that the provision(s) of the Act have been contravened with intent to evade payment of tax, the law empowers the authority to act under Section 130. It is not in the every case where the goods in transit have been detained under Section 129, the authority should proceed under Section 130. 23. A person can be attributed intent to evade payment of tax only if the contravention of the provisions of the Act or the rules made thereunder has some direct nexus with his action. He cannot be held liable under Section 130 for contravention of the provision of law by other person in the supply chain. Wrongful claim of input tax credit may be result of a bonafide claim as well and does not necessarily involve intent to evade payment of tax. Moreover, wrongful claim of input tax credit is not one of the conditions enumerated under Section 130(1) of the 2017 Act that could entail confiscation of the goods. Section 130 being penal in nature has to be construed strictly. 24. We must notice here that....
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....of tax for act or omission on part of a person not immediately linked to his activity. Learned counsel for the State agreed that even if a trader wants to be prudent, there is no system in place from where he can check as to whether his predecessors in supply chain have paid input tax credit or not. Meaning thereby, it is virtually impossible for a trader to ascertain as to whether input tax has been paid by his predecessors or not and it is for this reason also that the claim to input tax credit has been made subject to scrutiny and assessment. It is the fundamental legal principle embedded in legal maxim "LEX NON COGIT AD IMPOSSIBILIA"-That the law does not compel a man to do that which he cannot possibly perform". Once a person cannot be compelled to do something not possible, definitely he cannot be penalized for not doing so. 26. In the present case, the goods and conveyance in transit were accompanied with the documents as prescribed under Rule 138A, i.e. the invoice and the e-way bill. No discrepancy has been pointed out in the said documents even in the reply filed by the respondents. 27. The notice dated 14.09.2021 reveals that the same has been issued on the basis o....
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....t he has not been paying any tax and thus, the successor dealers in the said supply chain are guilty of availing input tax credit wrongfully. 29. From the pleadings on record, it is clear that there is no allegation that the petitioner has contravened any provision of the Act or the rules framed thereunder much less with an intent to evade payment of tax. It is also not the case of the State that the petitioner did not account for any goods on which he is liable to pay tax under the Act or that he supplied any goods liable to tax under the Act without having applied for registration or that he supplied or received any goods in contravention of any of the provisions of the Act. From the perusal of show cause notice issued to the petitioner under Section 130, the case alleged against the petitioner is that of wrongful claim of input tax credit. The petitioner or for that matter any registered person shall be entitled to tax credit of input tax on any supply of goods or services, only when he shall is able to show that the tax in respect of such supply has been paid to the Government either in cash or through utilization of input tax credit admissible in respect of the said supply.....