2020 (4) TMI 173 - HC - GST

Detention of goods alongwith the vehicle - Part B of the E-way not updated - specific case of the petitioner is that the value of goods (which are distinct and having separate HSN numbers) as per invoices is less than Rs. 50, 000/- and therefore there is no requirement of generation of E-way bills going by Rule 138 of the CGST Rules 2017 - HELD THAT - It is seen that the value of the tax and penalty demanded as per impugned Ext.P5 order is only Rs. 20, 274/- and the adjudication proceedings in pursuance to the impugned Ext.P5 detention order has not been finalised as of now in accordance with the law. True that some of the abovesaid contentions urged by the petitioner more particularly the contention based on page 2 of Ext.P7 would really deserve serious consideration at the hands of the authorities while finalizing the adjudication proceedings in pursuance to Ext.P5 detention order. This Court is of the view that taking note of the nature of the course of action now projected before this Court the case is only at the stage of detention of the goods and the vehicle concerned and therefore this Court is of the considered view that the abovesaid rival contentions raised by both sides need not be resolved by this Court at this stage of the matter. It is ordered that the 2nd respondent shall forthwith release the goods and vehicle detained pursuant to the impugned Ext.P5 detention order to the petitioner on the latter furnishing bank guarantee for the value of the amount of Rs. 20, 274/- as shown in the impugned Ext.P5 detention order. Thereafter the 2nd respondent will immediately take steps to ensure that the adjudication proceedings in pursuance to Ext.P5 detention order are finalized in accordance with law. Petition disposed off.

Summary

Issues:
1. Detainment of vehicle and goods by 2nd respondent.
2. Imposition of tax and penalty for not updating Part B of E-way bill.
3. Interpretation of Rule 138 of CGST Rules regarding E-way bill generation.
4. Legal obligation of consignor and transporter for E-way bill.
5. Relevance of Rule 138(7) and its applicability.
6. Intra-state supply vs. inter-state supply under Rule 138(7).

Analysis:
1. The petitioner, a Goods Transport Agency registered under GST Acts, challenged the detention of their vehicle and goods by the 2nd respondent due to the non-updation of Part B of the E-way bill. The petitioner argued that as per Rule 138, updating Part B is only required if the consignment value exceeds Rs. 50,000 individually. The petitioner contended that since only one invoice exceeded Rs. 50,000, they were not obligated to update Part B for the other consignments below the threshold. The petitioner sought release of goods and quashing of tax and penalty.

2. The main contention revolved around the interpretation of Rule 138 of CGST Rules, where the petitioner argued that updating Part B of E-way bill is optional for consignments below Rs. 50,000. The petitioner highlighted that they complied with updating Part B for the consignment exceeding Rs. 50,000 but not for others. The 2nd respondent alleged evasion based on multiple invoices, but the petitioner emphasized the distinct nature of goods in each consignment, justifying separate invoices.

3. The petitioner referenced the statutory provisions to support their argument that the obligation to update Part B arises only when individual consignments exceed Rs. 50,000. The petitioner emphasized that the goods in separate consignments were distinct, justifying the non-updation of Part B for consignments below the threshold. The petitioner also relied on departmental guidance supporting their position.

4. The judgment emphasized the mandatory nature of Rule 138, placing the obligation on registered persons to update E-way bills for consignments exceeding Rs. 50,000. The court noted the ongoing adjudication proceedings and ordered the release of goods on a bank guarantee. The court directed the 2nd respondent to finalize the adjudication proceedings promptly, considering all contentions raised by the petitioner.

5. The relevance of Rule 138(7) was discussed, with the petitioner citing departmental guidance exempting E-way bill generation for consignments below Rs. 50,000 until the notification of Rule 138(7). The court noted the applicability of this rule in the case and directed the 2nd respondent to consider these aspects during the adjudication process.

6. The distinction between intra-state and inter-state supply under Rule 138(7) was debated, with the government pleader arguing that the provision did not cover intra-state transactions. The court acknowledged this argument but emphasized the need to consider all contentions during the adjudication process, without resolving them at the current stage.

This detailed analysis covers the key issues raised in the judgment, providing a comprehensive understanding of the legal arguments and the court's decision.