GST Dept. Empowered To Detain Vehicle And Seize The Goods: Calcutta High Court Upholds Penalty

The Calcutta High Court has held that the GST department was lawfully permitted to impose a penalty under Section 129 as well as the SGST as the goods were found to be detained in the territory of the state.

The bench of Justice Bibek Chaudhuri has observed that Section 129 of the Central Goods and Services Tax Act, 2017, empowers the statutory authority to detain the vehicle and seize the goods. The goods shall be released only upon payment of a penalty equal to 200% of the tax payable on the goods.

The petitioner/assessee is the manufacturer or supplier of milestone bitumen emulsion and related products. The petitioner is a registered taxpayer duly registered under the GST Act with a specific GSTIN number. In the course of business, the petitioner supplied 158 drums of bitumen emulsion, each containing 200 kg, for a total of approximately 31,600 kg, with invoice number 555/2021-22 dated March 5, 2022, resulting in a proper E-Way bill dated March 5, 2022, which was valid from Begusarai to Guwahati until March 9, 2022.

For transporting the goods, the petitioner paid IGST at a rate of 18%, amounting to Rs. 2,58,804. On payment of IGST, an E-Way bill was generated for the transportation of the goods from Begusarai to Guwahati.

In the course of transportation, the good carriage suffered from a breakdown, and it was detained in a motor vehicle garage within the jurisdiction of Jalpaiguri. The vehicle was intercepted by the state tax officer on March 12th, 2022, and on inspection, it was found that the E-Way bill in respect of the consignment had expired.

The Assistant Commissioner, Bureau of Investigation Headquarters, imposed SGST at the rate of Rs. 2,58,804 and an SGST penalty of Rs. 7,18,900 and ordered the petitioner to pay the tax with interest. In order to release the vehicle, the petitioner had to pay tax and purchase the vehicle but preferred an appeal before the appellate authority. The appeal was dismissed in an order dated August 23, 2022.

The petitioner submitted that the petitioner has no intention to evade tax. He paid IGST at the rate of 18% on the value of the goods and procured an E-Way bill. However, it was not within the control of the petitioner that there would be a mechanical defect with the truck. The respondent authority cannot levy any SGST or fine because the E-Way bill has expired. The petitioner is not required to pay any tax because the vehicle was unable to proceed due to a breakdown in the territory of the State of West Bengal.

The department submitted that the petitioner’s consignment was found lying within the territory of the state for more than three days. The E-Way bill had expired. The driver of the vehicle stated that the vehicle suffered a breakdown. In support of his contention, he failed to produce a proper document. The petitioner had the opportunity to extend the validity of the E-Way bill when the goods vehicle allegedly had a mechanical defect. The petitioner did not take any steps toward the extension of the E-Way bill.

The court, while dismissing the petition, upheld the imposition of a penalty.

Case Title: Ashok and Sons (HUF) Vs. Joint Commissioner

Case No. - WPA 190 of 2023

Case Citation: 2023 LiveLaw (Cal) 37

Date: 06.02.2023

Counsel For Petitioner: Advocates Jagriti Mishra, Subham Gupta, Debayan Goswami, Reshab Kumar

Counsel For Respondent: Advocates Subir Kumar Saha, Bikramaditya Ghosh

Click Here To Read The Order