TaxTMI 
TaxTMI 
2025 (7) TMI 1525
X X X X Extracts X X X X
X X X X Extracts X X X X
....hipped and loaded onto another vehicle bearing Registration No. HR-38-U-0152 for onward journey to Delhi. However, only 248 bags were loaded onto the new vehicle, with 7 bags missing from the original consignment. 3.3. On 17.01.2022, the said vehicle was detained by the Mobile Squad at Lalitpur Bypass Road, Jhansi. The driver's statement was recorded in Form GST MOV-01. Following physical inspection, a report was generated in Form GST MOV-04 on 20.01.2022 alleging certain deficiencies. A detention order in Form GST MOV-06 dated 20.01.2022 was also issued. 3.4. Subsequently, a notice dated 21.01.2022 under section 129(3) of the Central Goods and Services Tax Act, 2017 For short, "the CGST Act, 2017", was issued in Form GST MOV-07 highlighting the discrepancy of 7 missing bags and the resulting shortfall in quantity from 18220 kg to 17670 kg. It was further alleged that the consignee, M/s. Diamond Trading Company, was prima facie non-existent and that the address of the consignor was incorrect as per departmental records. 3.5. The appellant submitted a detailed reply dated 24.01.2022 to Respondent No.3, denying all allegations. However, in view of pressing business exigencie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 129(3) of the Act stood concluded in terms of Section 129(5) of the Act read with Rule 142(3) of the Rules, no mandamus can be issued to the respondent no. 3 to pass an order under Section 129(3) of the CGST/UPGST/IGST Act. 8. The contention of the petitioner that a copy of the order under Section 129(3) of the CGST/UPGST/IGST Act be provided to him, is wholly misconceived inasmuch as the proceedings stood concluded in terms of sub-section (5) of Section 129 read with Rule 142 (3) of the Rules and therefore, no mandamus contrary to law can be issued in exercise of powers conferred under Article 226 of the Constitution of India." 3.10. Aggrieved by the aforesaid order, the appellant has preferred the present appeal before this Court. 4. Mr. Pawanshree Agrawal, learned counsel appearing on behalf of the appellant, at the outset, submitted that it is a settled position in law that every show cause notice must culminate in a reasoned final order. Such an order is essential to enable the person affected to avail all statutory remedies. 4.1. It was further submitted that the payment of penalty cannot be treated as voluntarily under Form GST DRC-03, as no show cause....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or penalty shall be levied or collected except by authority of law. 4.6. It was further submitted that the imposition of penalty has wider implications, including possible consequences in future adjudication or enforcement proceedings under the CGST Act, 2017. In the absence of a formal order, the appellant stands prejudiced, and the statutory right of appeal under Section 107 becomes illusory. However, the High Court erred in holding that no further order was necessary merely because the amount was paid during the pendency of the notice. 4.7. In light of the above submissions, the learned counsel prayed that the impugned order of the High Court be set aside, and appropriate directions be issued to the respondent authorities to pass final orders in Form GST MOV-09 and GST DRC-07, thereby preserving the appellant's right to appeal against the same under the CGST Act, 2017. 5. Per contra, Mr. Bhakti Vardhan Singh, learned counsel appearing on behalf of the respondents submitted that the vehicle bearing Registration No. UP78 GN 7563 transporting betel nuts from Nagpur to Delhi, was intercepted by the Assistant Commissioner, Mobile Squad Unit, Jhansi, on 17.01.2022. Upon exami....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatute is clear and unambiguous, it must be applied in its literal sense. In the present case, Section 129(5) is explicit, and the appellant cannot now be permitted to reopen concluded proceedings. Accordingly, the High Court's decision is correct, and the present appeal deserves to be dismissed. 6. We have heard the learned counsel appearing for both sides and carefully perused the materials available on record. 7. Admittedly, the consignment transported by the appellant was detained by the Mobile Squad for alleged contraventions under the IGST/CGST/SGST Act, 2017. Following inspection, a notice dated 21.01.2022 under Section 129(3) was issued to the appellant, directing the appellant to file objections. The appellant submitted a reply, but due to business exigencies, paid the tax and penalty amounting to Rs.7,20,440/- and uploaded the receipt in Form GST DRC-03 on 27.01.2022. Thereafter, the respondent authorities released the goods by passing discharge order in Form GST MOV-05 dated 27.01.2022. However, no formal order under Section 129(3) was passed. The appellant requested such an order, but the respondent authorities responded that in view of Section 129(5), no further ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onveyance shall be liable to detention or seizure and after detention or seizure, shall be released,- (a) on payment of the applicable tax and penalty equal to one hundred per cent of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent of the value of goods or twenty five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. ............. (3) The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th tax." 10. During the course of hearing, the learned counsel for the appellant drew our attention to Circular No.41/15/2018-GST dated 13.04.2018 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing, and the same reads as under: "Circular No. 41/15/2018-GST CBEC-20/16/03/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing **** New Delhi, Dated the 13th April, 2018 To The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All)/The Principal Directors General/ Directors General (All) Madam/Sir, Subject: Procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances -Reg. Sub-section (1) of section 68 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the "CGST Act") stipulates that the person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount shall carry with him the documents and devices prescribed in this beh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l these forms of having an e- way bill are valid. Wherever a facility exists to verify the e-way bill electronically, the same shall be so verified, either by logging on to http://mis.ewaybillgst.gov.in or the Mobile App or through SMS by sending EWBVER <EWB_NO> to the mobile number 77382 99899 (For e.g. EWBVER 120100231897). (c) .... (d) Where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV 01. In addition, the proper officer shall issue an order for physical verification/inspection of the conveyance, goods and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods. The proper officer shall, within twenty four hours of the aforementioned issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB- 03 and upload the same on the common portal. (e) Within a period of three working days from the date of issue of the order in FORM GST MOV-02, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. (i) .... (j) Where any objections are filed against the proposed amount of tax and penalty payable, the proper officer shall consider such objections and thereafter, pass a speaking order in FORM GST MOV-09, quantifying the tax and penalty payable. On payment of such tax and penalty, the goods and conveyance shall be released forthwith by an order in FORM GST MOV-05. The order in FORM GST MOV 09 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in 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 the 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, proposin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the tax and penalty demanded in the notice dated 21.01.2022 issued under Form GST MOV-07, Respondent No.3 released the goods and vehicle by passing a discharge order dated 27.01.2022 in Form GST MOV-05. However, no final order was passed, pursuant to the said notice dated 21.01.2022 issued under Section 129(3) of the CGST Act. 12. The appellant has categorically pleaded that due to business exigencies, they paid the tax and penalty and secured the release of the goods and vehicle detained. This payment, however, cannot be construed as an admission of liability for the alleged contraventions of the Act. It was further stated that the payment was made under protest, and the appellant had intended to contest the matter. Therefore, the proper officer was bound to pass a speaking order under section 129(3), to enable the appellant to exercise of their statutory right of appeal. 12.1. In contrast, the respondent authorities asserted that the payment was made voluntarily by the appellant prior to the passing of an order under Section 129(3), and that the appellant's authorised representative had withdrawn the objections earlier filed. Accordingly, they stated that in terms of sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted under Rule 142(5) and the Circular dated 13.04.2018, so as to enable the taxpayer to avail the appeal remedy as per law. 15. In the present case, payment was made under protest, and objections had already been filed by the appellant. Once objections are filed, adjudication is not optional, it becomes imperative to pass a speaking order to justify the demand of tax and penalty, to safeguard the right of appeal under Section 107 of the CGST Act, 2017. The language of section 129(3) is categorical in stating that the officer "shall issue a notice... and thereafter, pass an order". The use of the words "and thereafter" reinforces the mandatory nature of passing a reasoned order, regardless of payment, particularly where protest or dispute is raised. 16. Although the respondents claim that the objections were orally withdrawn and that the payment was made voluntarily by the appellant, no written material has been placed on record to substantiate the same. As between a written reply and an oral submission contrary to such written submission/reply, the written reply would prevail, and the authorities are duty-bound to consider that reply and pass speaking orders addressing each ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the knowledge of the violation of his right, thereby precluding his future right to agitate the issue, as it would be hit by laches. It will be useful to refer to the following judgments on waiver and acquiescence: (i) Sha Mulchand & Co. Ltd. v. Jawahar Mills Ltd. MANU: SC/011/1952: AIR 1953 SC 98 "12. The appeal Court, it will be observed, reversed the decision of the trial Judge and decided the appeal against the Company on two grounds only, namely, (1) that the Company had by the conduct of its two members abandoned its right to challenge the forfeiture, and (2) that the form of the order could not be supported as one validly made under section 38 of the Indian Companies Act. The learned Attorney-General, appearing in support of this appeal, has assailed the soundness of both these grounds. The learned Attorney-General contends, not without considerable force, that having, in agreement with the trial Court, held that no plea of acquiescence, waiver or estoppel had been established in this case, the appeal Court should not have allowed the Mills to raise the question of abandonment of right by the Company, inasmuch as no such plea of abandonment had been raised either....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l against him cannot disentitle that person from claiming relief in equity in respect of his executed and not merely executory interest. (See per Lord Chelmsford in Clarke's case 6 H.L.C. 632 : 10 E.R. 1443). Indeed, it has been held in The Garden Gully United Quartz Mining Company v. Hugh McLister L.R. 1 App. Cas. 39, that mere laches does not disentitle the holder of shares to equitable relief against an invalid declaration of forfeiture. Sir Barnest Peacock in delivering the judgment of the Privy Council observed at pages 56-57 as follows: "There is no evidence sufficient to induce their Lordships to hold that the conduct of the plaintiff did amount to an abandonment of his shares, or of his interest therein, or estop him from averring that he continued to be the proprietor of them. There certainly is no evidence to justify such a conclusion with regard to his conduct subsequent to the advertisement of the 30th of May, 1869. In this case, as in that of Prendergast v. Turton 62 E.R. 807, the plaintiff's interest was executed. In other words, he had a legal interest in his shares and did not require a declaration of trust or the assistance of a Court of Equity to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ore, to sustain a plea of abandonment of right or estoppel, it must be shown that the Company or either of its two members had done some act and/or had been guilty of some conduct between the 5th September, 1941, and the 16th November, 1941. No such act or conduct during such period has been or can be pointed out. On being pressed advocate for the Mills refers us to the conduct of Sundara Ayyar in opposing O.P. No. 10 of 1942 filed by the Mills and O.P. No. 11 of 1942 by the Income-tax authorities for restoring the Company to the register of companies and it is submitted that such conduct indicates that Sundara Ayyar had accepted the validity of the forfeiture. This was long after the Mills had reallotted the forfeited shares. Further, a perusal of paragraph 9 of the affidavit in opposition filed by Sundara Ayyar in O.P. No. 10 of 1942 will clearly show that he not only did not accept the forfeiture as valid but actually repudiated such forfeiture as wholly beyond the competence of the Board of Directors of the Mills. The reason for opposing the restoration of the Company may well have been that Sundara Ayyar desired, at all cost, to avoid his eventual personal liability as a share....
X X X X Extracts X X X X
X X X X Extracts X X X X
....atutory or other limitations intervene, unilateral acts never in themselves effect a change in legal status because it is fundamental that a man cannot by his unilateral action affect the rights and interests of another except on the basis of statutory or other authority. Rights and obligations are normally intertwined and a man cannot by abandonment per se of his rights and interests thereby rid himself of his own obligations or impose them on another. Thus, there can be no abandonment of a tenancy except on statutory grounds (as, for example, in the Central Provinces Tenancy Act, 1920) unless there is acceptance, express or implied, by the other side. It may, for example in a case of tenancy, be to the landlord's interest to keep the tenancy alive; and so also in the case of shares of a company. It may be to the interests of the company and the general body of shareholders to refrain from forfeiture if, for example, the value of unpaid calls exceeds the market value of the shares. Such a position was envisaged in Garden Gully United Quartz Mining Co. v. Hugh Mc Lister (1875) 1 App. Cas. 39. So also with waiver. A long catena of illustrative cases will be found collected in B.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was less served than the principles either of equity or of justice." (pp. 421-422). ...... 12. It seems to us that a statutory right of appeal cannot be presumed to have come to an end because the appellant has in the meantime abided by or taken advantage of something done by the opponent under the decree and there is no justification for extending the rule in Tinkler's case (1849) 4 Ex. 187 : 154 E.R. 1176 to cases like the present. In our judgment it must be limited only to those cases where a person has elected to take benefit otherwise than on the merits of the claim in the lis under an order to which benefit he could not have been entitled except for the order. Here the appellant, by withdrawing the pre-emption price has not taken a benefit de hors the merits. Besides, this is not a case where restitution is impossible or inequitable. Further, it seems to us that the existence of a choice between two rights is also one of the conditions necessary for the applicability of the doctrine of approbate and reprobate. In the case before us there was no such choice before the appellant and, therefore, his act in withdrawing the pre-emption price cannot preclude him for....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Khan & Ors. (2010) 9 SCC 496 : (2010) 3 SCC (Civ) 852 : 2010 SCC OnLine SC 987 at page 504, wherein, this Court emphasized that fairness, transparency, and accountability are inseparable from the duty to provide reasons. The Court held that failure to furnish reasons violates the principles of natural justice and renders the right of appeal or judicial review illusory. In paragraph 51 of the judgment, the Court distilled the following key principles: "a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. ....