GST: Betelnuts is a “perishable conmodity” & seizure provision apply accordingly

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GST: Betelnuts is a “perishable conmodity” & seizure provision apply accordingly

2019 TaxPub(GST) 0696 (Guj-HC)

M.K. Traders v. UOI

CENTRAL GOODS AND SERVICES TAX ACT, 2017

–Seizure of goods in transit–Seizure of perishable conmodity “Betelnuts”Release of––Where assessee sought release of its goods (Betelnuts) while the confiscation proceedings were in progress, considering that it was a perishable commodity, Court ordered release of goods with vehicle, subject to furnishing of bond. –Assessee in the instant petition sought release of its goods (Betelnuts) while the confiscation proceedings were in progress. Assessee pleaded for release of the conveyance and the goods (betel nut) pending the confiscation proceedings.

Held: The betel nut is a perishable commodity. The goods were lying in the open for many days. By the time, the confiscation proceedings would be concluded, probably, the goods might be gotten completely destroyed or may suffer extensive damage. Therefore, the conveyance and the goods were ordered to be released pending the confiscation proceedings, subject to the assessee executing a personal bond of stipulated amount.

Central Goods and Services Tax Act, 2017 Section 129

REFERRED :

FAVOUR : In assessee’s favour

A.Y. :

IN THE GUJARAT HIGH COURT

J.B. PARDIWALA & A.C. RAO, JJ.

M.K. Traders v. UOI

R/Special Civil Application No. 11013 of 2019

10 July, 2019

Application disposed off.

Petitioner (s) by: Chetan K Pandya (1973)

Respondent (s) by: Maithili Mehta Asstt. Government Pleader (1) and Notice Served by DS(5)

ORAL ORDER

J.B. Pardiwala, J.

Rule returnable forthwith. Ms. Maithili Mehta, the learned Assistant Government Pleader, waives service of notice of Rule for and on behalf of the respondents nos. 2, 3 and 4.

  1. The respondent no. 1, although served with the notice issued by this Court, yet has chosen not to remain present before this Court either in, person or through an advocate and oppose this writ application.
  2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs :–

“25(A) To issue a writ of Mandamus and/ or writ of certiorari and or any other appropriate writ, order or direction, directing the respondents to release the seized goods along with truck under section 129(1) (a) of the Central Goods and Service Tax Act, 2017 on such terms and conditions which may be deemed fit and proper to this Hon’ble Court and in the interest of the petitioner.

(B) Pending admission, hearing and final disposal of this petition, to direct the respondents to release the seized goods along with truck provisionally under section 129(1)(a) of the Central Goods and Service Tax Act, 2017.

(C) To pass any other and further orders as may be deemed fit and proper.

(D) To provide for the costs of this petition.”

  1. The case of the writ applicant in his own words, as pleaded in the writ application, is as follows :–

“2. The petitioner submits that the petitioner is challenging the action of the respondents of declining to release the goods under section 129(1)(a) of the Central Goods and Service Tax Act, 2017 (for sake of brevity and convenience ” the Central Goods and Service Tax Act, 2017″ shall be referred as “CGST”) which was seized under section 68 of CGST.

  1. The petitioner submits that the petitioner is having GSTIN/UNI : 24BSZMP9190B1Z7 and is engaged in the business of trading of Arecanut/Beetlenut. A copy of the petitioner’s registration certificate is annexed herewith and marked as Annexure-A. The petitioner submits that the petitioner had placed an order to RM Traders having GSTIN/ UNI ” 32BRVT6514P1ZU having address as SBM 2/157, Chetalayam Pokalamalam, Dist : Wayanad, Kerala 672592 for Arecanut/ Beetlenut. A copy of the RM Trader’s registration certificate is annexed herewith and marked as Annexure-B. The petitioner submits that R M Traders is the proprietorship concern of one Mr. Abdul Ramsheed T.
  2. The petitioner submits that RM Traders had supplied Arecanut through Bahubali Transport Co.of Bangalore. The details of goods and requisite documents are as under:–
Invoice No. & Date Bill of Lading /LRRR No. Invoice value Motor Vehicle No. E-Way Bill No.
8

3-6-2019

1027 48,15,720 TN-28AL-1989 56111095 8062

Copies of the Invoice and E-way bill raised by RM Traders on the petitioner are annexed herewith and marked as Annexure- C collectively.

  1. The petitioner submits that the driver of the motor truck was carrying the Invoice, E-way bill and LR receipt while transporting Arecanut from Bangalore to Ahmedabad. The petitioner submits that truck was intercepted on 6-6-2019 at 7:45 PM at Songadh, District Tapi by the respondent no. 4. The petitioner submits that driver of the truck had produced the documents relating to the goods under transport which was duly certified and signed as correct by the respondent no. 4. The petitioner submits that the respondent no. 4 then handed over the truck to the driver and asked him to park at the place where it was intercepted at his risk and responsibility.
  2. The petitioner submits while exercising the powers under section 68 of the CGST and making FORM GST MOV-01, the requisite details were filled-in by the officers of the respondents based on the documents carrying by the driver of the motor truck and same are mentioned in the Annexure to the deponent’s statement in form GST MOV-1. Copies of the FORM GST MOV-01 and FORm GST MOV-02 are annexed herewith and marked as Annexure D collectively.Though it is made categorical statement in the form that petitioner is consignee and RM Traders is consignor. the Annexure to the deponent’s statement in FORM GST MOV-01 also contains GSTIN. Invoice, LR and Airway Bill Nos. meaning thereby the driver was carrying all requisite documents. Inspite of that the truck was seized by the respondents.
  3. The petitioner submits that in spite of an email was sent by the respondent no. 4 to the registered mail ID of the petitioner and its Auditors. A copy of the email, dated 6-6-2018 sent at 22:38 hrs. is annexed herewith and marked as Annexure -E.
  4. The petitioner submits that the petitioner replied by an email, dated 8-6-2019 to the respondent and supplied the document called for. A copy of the petitioner’s reply by an email, dated 8-6-2019 is annexed herewith and marked as Annexure-F.
  5. The petitioner submits that inspite of all information sent by an email, the respondent no. 4 on 9-6-2019 issued FORM GST MOV-04. A copy of the FORM GST MOV-04 is annexed hereto and marked as Annexure G. It is pertinent to note that the respondent No. 4 had noted on physical verification that quantity of the goods and declared goods are correct. However, genuineness of the transaction is in question. Hence, for the proceedings is initiated.
  6. The petitioner submits that on the same day i.e. on 9-6-2019 at 5:30 pm the respondent no. 4 issued FORM GST MOV-06 on the ground that prima facie, the documents tendered are found to be defective and for physical verification. A copy of the Form GST MOV-06 is annexed hereto and marked as Annexure H.
  7. The petitioner submits that the respondent no. 4 then telephonically asked to provide Bank Statement in PDF format which was supplied by an email, dated 106.2016. A copy of the email, dated 10-6-2019 is annexed herewith and marked as Annexure I
  8. The petitioner submits that respondent no. 4 then telephonically asked the petitioner to supply the details in ZIP file like GSTR1 in PDF, sales invoice and E-way Bill in ZIP file. A copy of the email, dated 11-6-2019 is annexed herewith and marked as Annexure J.
  9. The petitioner submits that by an email, dated 12-6-2019 the petitioner again sent sales invoices in PDF Zip file as required by the respondent no. 4. A copy of the email, dated 12-6-2019 is annexed herewith and marked as Annexure K. The petitioner submits that on 12-6-2019 after supplying all the details the petitioner by an email requested to release the goods and truck in lieu of the threat of cyclon “Vayu”. A copy of the email, dated 12-6-2018 is annexed herewith and marked as Annexure L.
  10. The petitioner submits that since the respondents did not release the goods and truck, without prejudice to the rights and contention, the supplier deposited/paid applicable tax and penalty under section 129(1)(a) of he CGST Act 2017 and sent the challan to the respondent with a request to release the goods. A copy of the email, dated 15-6-2019 along with challan is annexed herewith and marked as Annexure-M collectively. The petitioner submits that in spite of payment of applicable tax and penalty under protest and safeguarding the interest of the Department, the respondent remained adamant and did not release the goods and trucks.
  11. The petitioner submits that by an email, dated 17-6-2019 the petitioner sent reminder request to release the goods and truck. A copy of the email, dated 17-6-2019 is annexed herewith and marked as Annexure-N.
  12. The petitioner submits that inspite of detailed correspondence and payment of applicable tax and penalty as specified under section 129(1)(a) of CGST Act 2017, the respondent no. 4 by an Order, dated 18-6-2019 without determination of applicable tax and penalty under section 129(1) (a) of CGST Act, 2017 issued FORM GST MOV-10 and asked the petitioner/supplier to deposit the tax and penalty along with full amount of value of the goods and fine. A copy of the form GST MOV-10, dated 18-6-2019 is annexed herewith and marked as Annexure O.
  13. The petitioner submits that the truck was intercepted on the allegation that the driver of the truck had insufficient documents for transportation of Arecanut. Since the driver was not enough educated about GST documents, he could not resist the allegations and/or contentions of he department and signed the documents wherever he was asked. but facts remain that the supplier RM Traders of Kerala is the registered proprietorship entity and the petitioner being the purchaser is also registered proprietorship entity at Gujarat. The petitioner submits that the registration numbers of both the entitles were issued after due verification and the vehicle had transported the goods with valid and genuine documents.
  14. The petitioner submits that Arecanuts are agriculture produce and perishable goods and therefore, if it is kept loaded on the truck or not stored in proper hygienic and moisture free atmosphere, the quality of Arecanut would be deteriorated because there are all possibilities that Arecanut may get moisture and loose its quality and value, if the same are not released.
  15. The petitioner submits that, it is crystal clear that a genuiine commercial transaction between two GSTIN registered entities executed with the requisite documents and the same have been made available to the office of the respondents. Neither the supplier nor the purchaser is fictitious entities and both exist and therefore, the petitioner being purchaser being purchaser consignee of the goods is owner of the goods.
  16. The petitioner submits that without prejudice to the rights and contentions, the petitioner requested to release the goods under section 129(1)(a) of the CGST Act, 2017 as the supplier had deposited/ paid applicable tax and penalty equal to 100% of the tax payable on Arecanut for release of the goods and vehicle so as to see that the goods do not deteriorate in its quality. The petitioner submits that the petitioner requested to accept applicable tax penalty equal to 100% of the tax payable on Arecanut for release of the goods and vehicles and withdraw the further proceedings initiated under section 130 of the CGST Act, 2017. However, the respondent did not release the goods by accepting the applicable tazxand penalty equal to 100% of the tax payable of Arecanut for release of the goods.”
  17. This writ application has been vehemently opposed by Ms. Maithili Mehta, the learned Assistant Government Pleader appearing for the respondents nos. 2,3 and 4, by filing an affidavit-in-reply on behalf of the respondent no. 4 duly affirmed by one Bhaveshbhai Vikrambhai Patel, State Tax Officer, Kaparada Mobile Squad, Division -VIII, Surat. In the affidavit-in-reply, the following break up has been given :–

“13.I further say and submit that in the present case MOV 10 has been issued which stipulates payment of Rs. 52,74,360- which includes.

(i) Rate of tax 2,29,320 5% under GST.

(ii) Calculation of penalty Rs. 2,29,320 under GST equal to tax amount.

(iii) Calculation of fine for confiscation of goods Rs. 45,86,400 invoice amount less total tax amount GST.

(iv) Determination of fine in lieu of confiscation of conveyance Rs. 2,29,320 under GST. The said calculation is very much envisaged in section 130(1) and (2) of the GST Act, 2017.

  1. The stance of the respondents nos. 2, 3 and 4 is that the conveyance and the goods came to be detained applying the provisions of section 130 of the Goods and Service Tax Act, 2017.
  2. Thus, the position as on date is that the confiscation proceedings are in progress. We are only concerned, as on date, with the issue, whether we should order release of the conveyance and the goods (betel nut) pending the confiscation proceedings.
  3. It goes without saying that the betel nut is a perishable commodity. The goods are lying in the open past almost 35 days. By the time the confiscation proceedings are concluded, probably, the goods may get completely destroyed or may suffer extensive damage.
  4. It is brought to our notice that as on date, the writ applicant has deposited the amount of tax to the tune of Rs. 2,29,320 i.e. 5% under the GST. He has also deposited the amount of penalty to the tune of Rs. 2,29,320, i.e. equal to amount of tax amount. According to the respondents, the calculation of fine of confiscation of goods would come to Rs. 45,86,400. It goes without saying that the writ applicant would ultimately be governed by the final orders that may be passed in the confiscation proceedings subject to his right of preferring an appeal against such order of confiscation or availing any other legal remedy before the appropriate forum in accordance with law.
  5. We are of the view that the conveyance and the goods should be released pending the confiscation proceedings, subject to the writ applicant executing a personal bond of Rs. 45,86,400 to the satisfaction of the respondents nos. 2, 3 and 4. On executing a personal bond of Rs. 45,86,400, the respondent shall, forthwith, release the conveyance and the goods, subject to the final outcome of the confiscation proceedings.
  6. With the above, this writ application is disposed of. Direct service is permitted

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