TMI Blog2021 (1) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... ravention, based on the material before him, that he must proceed to pass the order of detention in Form GST MOV-6. If there is no material to come to such a conclusion, he has to issue a release order in Form GST MOV-5 and permit an unconditional clearance of the goods and vehicle. At all the above stages, the proper officer is also required to strictly adhere to the time limits prescribed in the circulars issued from time to time so that the goods are not detained for a period longer than that permitted under the statute - Since the statutory provisions and the circulars envisage the service of a notice in Form GST MOV-7, simultaneous with the issuance of a detention order in Form GST MOV-6, the 'non-finality' of the latter order is statutorily recognised and hence, it will not be open to the person concerned to prefer any statutory appeal or writ petition against the said order in Form GST MOV-6. The person served with an order in Form GST MOV-6, together with a notice in Form GST MOV-7, has the option of either paying the amounts demanded in the notice and clearing the goods or contesting the matter by preferring his objections to the proposals contained in the notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggrieved by the order of the proper officer must necessarily approach the appellate authority before which an appeal against the adjudication order under Section 129 (3) of the Act is maintainable. In the instant case too, the remedy of the petitioner is to approach the appellate authority under the Act against the finding of the proper officer. The petitioner is relegated to his alternate remedy of preferring appeals against the said adjudication orders before the appellate authority under the Act - there are no reason to interfere with the adjudication orders in Form GST MOV-9 impugned in the writ petition - petition disposed off. - W.P.(C).No.17379/2020 W.P.(C).No.22072/2020 & W.P.(C).No.22608/2020 - - - Dated:- 12-1-2021 - M/S. CHAKKIATH BROTHERS Versus THE ASSISTANT STATE TAX OFFICER, PRINCIPAL COMMISSIONER, TAX TOWERS, STATE OF KERALA M/S. UNIVERSAL CABLES LIMITED Versus STATE OF KERALA, ASSISTANT STATE TAX OFFICER THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FOR THE PETITIONER : BY ADVS.SHRI.PRABHAKARAN P.M. SRI.KARTHIK S. NAIR SHRI.NAVAZ P.C. FOR THE RESPONDENT : BY SMT.DR.THUSHARA JAMES, GOVT. PLEADER JUDGMENT As these writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce and intercourse throughout the territory of India, a right guaranteed under Article 301 of the Constitution. The justification of any legal provision that authorises such detention must, therefore, be through a demonstration of the reasonableness of the provision, and its necessity in larger public interest. 5. Tax legislations in our country, especially those dealing with indirect taxes, have always found the need to have provisions for detaining goods and vehicles while in transit to ensure that tax that is legitimately due to the State is not lost through deliberate evasion by unscrupulous assessees. It is therefore that such provisions have been incorporated as incidental machinery provisions for levying the tax as contemplated in the statute concerned. The detection of evasion, and the consequential recovery of tax due to the State, are seen as acts that sub serve larger public interest, and hence the restrictions to the exercise of the constitutional freedoms are seen as reasonable. 6. It follows, as a corollary to the above position, that unless there is a possibility of tax evasion, a detention of goods and vehicles cannot be justified, and that an authority veste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. (2) The provisions of sub-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) or clause (c). (4) No tax, interest or 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 tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -way bill electronically on the common portal, before commencement of such movement, Rule 138A obliges a person in charge of a conveyance to carry the invoice/bill of supply/delivery chalan and a copy of the e-way bill in physical form or the e-way bill number in electronic form. Rules 138B and 138C deal with the procedure for verification of documents and conveyances and the inspection and verification of goods respectively. 3. On a contravention of the provisions of the Act and Rules being detected as above, the goods and conveyance concerned become liable to detention/seizure, and after such detention/seizure, can be released only on making the payments stipulated in clauses (a) or (b) of Section 129 (1) or upon furnishing the security as provided in clause (c) thereof, as the case may be. What is apparent from the said provision is that there is no discretion conferred on the detaining authority to release the goods and conveyance on terms that are less stringent than what is specified under the aforesaid clauses of Section 129 (1). Further, although sub-section (2) of Section 129 makes the provisions of sub-section 6 of Section 67 applicable mutatis mutandis for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings in respect of the notice in Section 129 (3) shall be deemed concluded. In other words, if in response to the notice issued under Section 129 (3), the person concerned pays the amounts demanded therein without demur, the proceedings under Section 129 (3) for that person is deemed concluded by the passing of a formal order under Section 129 (3). On the other hand, when the notice under Section 129 (3) of the Act is served on a person who, on being served with an order of detention, has cleared the goods and conveyance on furnishing a bond and/or bank guarantee, and thereafter responded to the notice served on him, then the proceedings under Section 129 (3) of the Act for such person is deemed concluded only after the adjudication proceedings is completed by the proper officer as above. For such person, an appellate remedy lies against the adjudication order of the proper officer under Section 129 (3). Further, although not expressly provided for under the statute, I am of the view that to render the appellate remedy effective, a requirement ought to be read into the statutory framework that the proper officer should not invoke the bank guarantee for a period of three months fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner or an officer authorised by him, and a copy of the said order has to be served on the person in charge of the conveyance. ● On completion of the physical verification/inspection, the proper officer has to prepare a report in Form GST MOV-4 and serve a copy of the report on the person in charge of the conveyance. The proper officer has also to record, on the common portal, the final report of the inspection in Part B of Form GST EWB-03, within 3 days of such physical verification/inspection. ● Where no discrepancies are found after the inspection of the goods and conveyance, the proper officer has to issue a release order in Form GST MOV-5 and allow the conveyance to move further. Where the proper officer is of the opinion that the goods and conveyance need to be detained u/s 129 of the CGST Act, he shall issue an order of detention in Form GST MOV-6 and a notice in Form GST MOV-7, specifying the tax and penalty payable. ● Where the owner of the goods pays the tax and penalty as applicable, the goods and conveyance may be released by an order in Form GST MOV-5 and the order in Form GST MOV-9 shall be uploaded on the common portal and the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Form GST MOV-11 is passed, the order confirming tax and penalty in Form GST MOV-9 shall be withdrawn. ● If no person comes forward to pay the amounts mentioned in Form GST MOV-11, the proper officer shall auction the goods and/or conveyance by public auction and remit the sale proceedings to the account of the central government. 10. As can be seen from the discussion in earlier paragraphs of this judgment, the procedure prescribed above substantially conforms to the requirements of Section 129. The only aspect that probably requires clarification, in the light of the spate of cases that have been filed before this court of late, is as regards the scope and ambit of the orders passed by the proper officer in Form GST MOV-6 and Form GST MOV-9 respectively. 11. It is my view that the procedure to be sequentially followed from the stage of recording the statement of the driver in Form GST MOV-1 to the stage of issuing an order in Form GST MOV-6 detaining the goods, is for the purpose of determining whether the goods were being transported, or stored during transit, in contravention of the provisions of the Act and Rules. The proper officer is required to apply his mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal against an order passed under Section 129 (3) of the Act and accordingly, refrain from invoking the bank guarantee furnished by the person concerned for a period of three months from the date of service of the order in Form GST MOV-9, so that the appellate remedy available to the person concerned is not rendered illusory. (emphasis supplied) 14. In the backdrop of the above discussion regarding the substantive and procedural scope and ambit of Section 129 of the GST Act, I now proceed to examine the facts in the individual writ petitions and the legality of the orders impugned therein. W.P(C).No.17379 of 2020 and W.P(C).No. 22608 of 2020: In W.P(C).No.17379 of 2020, the petitioner was transporting fruit drinks from Tamil Nadu to Kerala, after ensuring that the transportation of the goods was duly accompanied by valid invoices and e-way bills that described the goods as 'fruit drinks'. The goods and the vehicles were, however, detained by the respondents on the ground that the description of the goods in the invoice was incorrect in that, the goods were actually classifiable as 'aerated soft drinks with added flavours' attracting a different HSN cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d vehicle on furnishing a bank guarantee for the amount demanded by the respondents and directed the respondents to pass the final adjudication order in Form GST MOV-9 pending disposal of the writ petition. It was also made clear that the bank guarantee would not be invoked without further orders from this court. The respondents thereafter passed the final adjudication order in Form GST MOV-9 confirming the proposals in the notice issued to the petitioner, both on the ground of mis-classification of the goods as well as for the reason that incomplete particulars were furnished in the e-way bill. On receipt of the said order, the petitioner amended the writ petition to incorporate a challenge against the said order as well. 5. In both the above writ petitions, the detention of the goods and vehicle was for the reason that there was an alleged mis-description of the goods in the transport documents. The issue as to whether a mis- classification of the goods can be the basis for a detention under Section 129 of the GST Act has been the subject matter of many decisions of this court as well as other High Courts. In NVK Mohammed Sulthan Rawther Sons v. UOI Ors (Judgment dated 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation cannot form the basis of a detention under Section 129 of the GST Act. I accordingly quash the impugned detention orders and notices in the said writ petition and allow the same. The respondents shall forthwith, and at any rate within two weeks from the date of receipt of a copy of this judgment, return the bank guarantee furnished by the petitioners to them. 8. In W.P(C) No.22608 of 2020 also, the mis-classification alleged is not one that amounts to a mis-description of the kind described above. I find, however, that the order in Form GST MOV-9 passed by the respondents confirms the proposals in the notice on the ground not only of alleged mis- classification but also for the reason that the details required in Part B of the e-way bill were not furnished. Thus while the detention cannot be justified on the ground of mis-classification and the impugned detention order set aside to the said extent, it is sustained to the extent it justifies the detention on the second ground of the e-way bill not being a valid document. Since the adjudication order in Form GST MOV-9 has already been passed, I deem it appropriate to relegate the petitioner therein to his appellate remedy ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own (CKD) condition or in batches or lots. In particular it was pointed out that the consignments were not covered by separate delivery chalans for each vehicle. 3. It would appear that although the petitioner subsequently produced two separate delivery chalans before the proper officer, the said chalans did not contain the details required under Rule 55 (1) of the CGST Rules and hence the proper officer proceeded to issue the detention order in Form GST MOV-6, and notice in Form GST MOV-7 to the petitioner. In the writ petition, the petitioner impugned the said detention order and notice and sought an expeditious release of the goods and the vehicle. 4. When the writ petition came up for admission, this court took note of the submission of the learned counsel for the petitioner that a reply had already been preferred to the notice in Form GST MOV-7 and directed a listing of the case after three days so that an adjudication order under Section 129 (3) in Form GST MOV-9 could be passed by the proper officer after considering the objections of the petitioner. The said order was subsequently passed confirming the proposals in the notice. This court then permitted the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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