🧠 HeadNote & Summary
(2021) taxcode.in 21 HC
IN THE HIGH COURT OF GUJARAT
K K Traders
v.
Union of India and Anr.
R/Special Civil Application No. 17128 of 2021
Decided on 23-Dec-21
Ms. Justice Sonia Gokani and Ms. Justice Nisha M. Thakore
Add. Info:
For Appellant(s): Mr. Jigar D Dave (6528).
For Respondent(s): Mr. Utkarsh R Sharma (6157).
Judgment/Order:
ORAL ORDER
(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)
1. The petitioner is before this Court seeking following reliefs:-
“(A) Your Lordships may be pleased to admit and allow this petition;
(B) Your Lordships may be pleased to issue a writ of Mandamus or any other appropriate writ, order or direction in the nature of Mandamus by quashing and setting aside the Order of Detention U/s. 129(1) of the CGST Act, dated 22.07.2021 issued by the respondent No.2 in the interest of justice;
(C) Your Lordships may be pleased to quash and set aside the Show Cause Notice U/s. 130 of the CGST Act dated 24.07.2021 issued by the respondent No.2 in the interest of justice;
(D) Your Lordships may be pleased to quash and set aside the Order of Confiscation of goods and conveyance and demand of tax, fine and penalty passed by the respondent No.2 dated 11.08.2021 in the interest of justice;
(E) Pending admission, hearing and final disposal of this petition, Your Lordships may be pleased to direct the respondent authorities to release the confiscated goods and conveyance i.e. Truck bearing Registration No. KA-01-AE-4259 without payment of tax and penalty in the interest of justice on appropriate terms and conditions;
(F) Pending admission, hearing and final disposal of this petition, Your Lordships may be pleased to direct the respondents to release the goods (Areca nut) without payment of tax and penalty in the interest of justice;
(G) Pending admission, hearing and final disposal of this petition, be pleased to stay the Order of Confiscation of goods and conveyance and demand of tax, fine and penalty dated 11.08.2021 in the interest of justice;
(H) Your Lordships may be pleased to grant such other and further relief/s that may be deemed fit and proper in the interest of justice.”
2. It is the case of the petitioner that one Shri Nandha Trade Mart, Rajkot, Gujarat had placed an order with the petitioner for supply of Areca Nut. The present petitioner had supplied the goods and transported to M/s. Shri Nandha Trade Mart located at Rajkot having GSTIN 24KRPPK9157H1ZU on vehicle having Registration No. KA- 01-AE-4259.
2.1. The requisite documents as provided under Section 68(1) of the Central Goods and Services Tax Act, 2017 were duly generated and handed over to the driver of the vehicle. The consignment of the goods were intercepted on 22.07.2021 at Vasad Toll Plaza and the statement of the driver also had been recorded and the goods and conveyance had been seized and detained by the authority. On the very same day, an order for physical verification had been passed in Form GST MOV- 02. The goods and conveyance, according to the petitioner were accompanied by e-way bills and invoices however, the detention order in Form GST MOV-06 under Section 129(1) of the Central Goods and Services Tax Act read with Section 20 of the Integrated Goods and Services Tax Act had been passed.
2.2. The detention order reflects the seller and dealer being suspicious but the order is silent on the alleged discrepancies as no reason has been given with regard to the suspicious parties. There is no discrepancy on record in the e-way bills and invoices. It is the grievance on the part of the petitioner that the authority has arbitrarily imposed fine of Rs. 54,93,605/- despite knowing fully well that in view of Section 130(2) of the CGST Act, the fine should not exceed the market value of goods less the tax chargeable thereon.
2.3. The reply to the show cause notice was on 06.08.2021. Without considering the version of the petitioner, confiscation of goods and conveyance has already been done. The demand of fine and penalty has been done on 11.08.2021. Therefore, the present petition with the aforementioned prayers.
3. On issuance of notice, affidavit-in-reply has been filed by the State questioning the very entertainment of this petition. According to the State, the order of detention was passed on 22.07.2021 and the order passed in MOV-11 under Section 130 as well as the show cause notice under Form MOV-10 was passed on 24.07.2021. The direction which is sought to release the confiscated goods and conveyance without payment of tax and penalty itself is not sustainable.
3.1. It is further the say of the respondent authority that the information had been received from the Controlling Authority in connection with the conveyance bearing Registration No. KA-01-AE-4259 that there are some serious discrepancies and therefore the respondent authority has intercepted the vehicle at Kamrej Toll Plaza, Surat.
3.2. It is the say of the respondent that the goods were being transferred from K.K.Traders, Kannur, Kerala to Shri Nandha Trade Mart, Gujarat. On interception, the respondent had issued MOV-01 and MOV-02 to the driver and subsequently, MOV-04 had been issued for the physical verification of goods which are already on record.
3.3. It is a clear case of the respondent that the recipient Nandha Trade Mart is suspicious which had shown its principal place of business at Riya Road, Rajkot and on verification of the data, the authority found that Nandha Trade Mart has filed only summary return in form GSTR3B for June, 2021. The said return is NIL. Again it transpired that it has generated 16 e-way bills of inward supply worth Rs. 4,79,31,650/- in the month of June, 2021.
3.4. On due verification, the discrepancies had been noted by the respondent authority which had also communicated to the Deputy Commissioner for the physical verification of the place of business of Shri Nandha Trade Mart. The report of verification indicated that Shri Nandha Trade Mart is a shop of 90 sq.ft, there are no stock available and the purchase of Rs. 4.50 crores is also seriously questioned. The proprietor of Shri Nandha Trade Mart has been contacted however, the number has been switched off and hence, the proceedings had not been initiated.
3.5. According to the respondent, further verification of the e-way bills generated on the different vehicles bearing Registration Nos. TN-88-A-6772 and KL-10-BC-3796 when verified from the movement of the vehicle number from the RFID data, it was found that the movement from Kerala to Gujarat is not matching. The said vehicle has never travelled from Kerala to Gujarat on that particular date. Hence, only billing is done without actual movement of the goods. It has therefore seriously questioned this entire transaction. The purchase of Shri Nandha Trade Mart are from different traders.
3.6. It is further contended that the present petitioner’s credentials also are questionable. His registration number also has been cancelled by the State of Kerala. It is further to be noticed that the details which have been provided in relation to the present petitioner is also reflecting that there is no inward supply or stock available with the seller also.
4. Learned advocate Mr. Jiger Dave has stated that there will be no requirement of any rejoinder and therefore, we have taken up the matter for hearing. He has urged that the authority concerned has travelled beyond the show cause notice which is quite vague and unclear. He has also sought to rely on the following three decisions of this: –
(i) Synergy Fertichem Pvt. Ltd. vs. State of Gujarat [SCA 4730/2019, decided on 08.03.2019];
(ii) Sri Krishna Traders vs. State of Gujarat [SCA 11016/2019, decided on 29.01.2020]
(iii) Shri Anant Jignesh Shah, Proprietor of M/s. Nakoda and Company vs. The Union of India through the Under Secretary and Others [SCA 12712/2020, decided on 06.11.2020]
5. Learned Assistant Government Pleader Mr. Trupesh Kathiriya has urged that credentials of both the purchaser and seller are seriously questionable, therefore, this is not a case where the Court needs to intervene. He also has further submitted that with all his proposal of furnishing bank guarantee etc. the seller may show his bona fides by preferring an appeal under Section 107 of the CGST Act.
6. For the reasons to be recorded hereinafter, we choose not to entertain this petition:-
6.1. The order of detention dated 22.07.2021 passed in MOV-11 under Section 130 as well as the show cause notice in form GST MOV-10 issued on 24.07.2021 are sought to be quashed and set aside. The direction also has been sought to release the confiscated goods and conveyance of the truck bearing registration no. KA-01-AE-4259 without payment of tax and penalties.
6.2. It emerges from the record that the information had been received from the controlling authority by the respondent that the said vehicle has certain discrepancies, therefore, the same was intercepted at Kamrej Toll Plaza, Surat at 12.40 pm. The driver when was asked for the documents, he provided the invoice as well as the e-way bills and it was revealed that the goods were being transferred from K.K.Traders, Kannur, Kerala to Shri Nandha Trade Mart, Gujarat. The MOV-10 and MOV-02 had been issued to the driver of the vehicle and subsequently MOV-04 was also issued for physical verification of the goods.
6.3. After due verification of all the details from the portal, the respondent authority had found that K.K.Traders, Kannur had a GST No. 32EQQPK6668J1Z4 and Shri Nandha Trade Mart had been recipient of the goods whose principal place of business was at Riya Road, Rajkot. On Inquiry it had been noticed that the summary return had been filed by the Nandha Trade Mart in form GSTR3B for the month of June, 2021. It was a NIL return.
6.4. From the e-way bills available, it appeared that 16 e-way bills had been generated of inward supply worth Rs. 04,79,31,650/- in the month of June, 2021. The Deputy Commissioner was communicated this and the physical verification had taken place at Shri Nandha Trade Mart, Rajkot. It was found that it has a shop of 90 sq.ft. and there is no stock available although it had purchased goods worth Rs. 4.50 Crores (rounded off). The authority therefore initiated the proceedings under Section 130 of the CGST Act. The contact number of Mr. Akhil – Proprietor of Shri Nandha Trade Mart was switched off, hence, there was a need to proceed against the purchaser of the goods.
6.5. It also emerged that the e-way bills were generated on different vehicles i.e. TN-88-A-6772 and KL-10-BC-3796. The movement of vehicle when was verified on RFID data, it was found that from Kerala to Gujarat, the e-way bill had not matched with the RFID data. The said vehicle never travelled from Kerala to Gujarat on that particular route and hence, only billing was done without actual movement of goods. It is alleged by the respondent that this was with an intention to escape the tax liabilities. Shri Nandha Trade Mart had purchased from K.K.Traders, Karakattu Traders, Matteri Trading and Puthiyaveettil Agency. The Matteri Trading had purchased from Sundri Agency but the Sundri Agency had not shown the purchase in the return. Without the stock, the Sundri Agency could not supply to Matteri Trading. Similarly, K.K.Traders, Karakattu Traders and Puthiyaveettil Agency also had not shown any inward supplies or stock till the inquiry was made. The K.K.Traders also had not filed any return, therefore, the respondent had a valid reason to assume that these firms were not in a position to supply the goods to Shri Nandha Trade Mart, Rajkot.
6.6. It was necessary to establish as to from where the purchase of goods had been made. Shri Nandha Trade Mart had not mentioned any kind of sale. The Kerala Authority had also cancelled the registration of the present petitioner on the ground that it has allegedly involved in the tax evasion. As the traders from whom Shri Nandha Trade Mart had purchased had not shown any purchases of stock and their sale of goods to the dealer of Gujarat was without their sale and purchase.
6.7. This according to the respondent is nothing but an attempt to cause the revenue loss to the exchequers.
7. With this robust facts, the Court is disinclined to intervene and in absence of any breach of principles of natural justice or for that matter, with these prima facie nonacceptable details under the law, petition is DISMISSED.
8. The Court has chosen not to enter into the merits. These prima facie details have led the Court to direct the petitioner to move to the concerned authority and take recourse to the alternative remedy. Once he approaches, let the authority concerned consider it in accordance with law without being influenced by this disposal.
(SONIA GOKANI, J)
(NISHA M. THAKORE,J)
Original judgment copy is available here.
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