Assessee’s writ petition dismissed as statutory appeal remedy available against GST detention order and penalty notice.

Case Name:

Shiv Enterprises Thru.Employee Gaurav Kumar & Anr. Vs. State Of U.P.

Misc. Bench No. 19542 of 2019

Key Takeaways:

- If a statutory appeal remedy is available against an order, a writ petition challenging that order is generally not maintainable.

- The court did not decide the merits of the case but dismissed the writ petition on the ground of the availability of an alternative statutory remedy.

- The assesses were free to avail the statutory appeal remedy, and the court’s order would not be a hurdle for that purpose.

Issue:

Whether the assessee’s writ petition challenging the GST detention order and penalty notice was maintainable when a statutory appeal remedy was available under Section 107 of the Central GST Act.

Facts:

The petitioner, Shiv Enterprises, was transporting goods from Panipat (Haryana) to Lucknow. On 06.06.2019, the Assistant Commissioner of State Tax, Mobile Squad-2, Lucknow, passed a detention order under Section 129(1) of the Uttar Pradesh GST Act and issued a penalty notice under Section 129(3) of the same Act. The petitioner challenged these orders through a writ petition, contending that no seizure could be made on the ground of a technical glitch and unintentional procedural lapse, as the consignment was supported by all required documents, including a valid e-way bill.

Arguments:

Petitioner’s Arguments:

- No seizure could be made due to a technical glitch and unintentional procedural lapse, as the consignment was supported by all required documents, including a valid e-way bill.

- The transaction was in the knowledge of the department, and there was no intention to evade tax payment.

- The seizure was based on suspicion and conjectures and was, therefore, bad in law.

- The petitioner continued to be the owner of the goods as the supply was not concluded, and there was no contravention of Section 129 of the UPGST Act.

- The petitioner relied on the judgments of the Orissa High Court in Hindustan Liver Limited and Another vs. The Collector and District Magistrate, Sundargarh, and the Supreme Court in Hindustan Steel Ltd. vs. State of Orissa.

Respondent’s Arguments:

- A final order had been passed under the provisions of the Central GST Act, 2017, and against the said order, the petitioners had a statutory remedy of appeal under Section 107 of the CGST Act.

- Therefore, the present writ petition filed by the petitioner was not maintainable and liable to be dismissed.

Key Legal Precedents:

- Hindustan Liver Limited and Another vs. The Collector and District Magistrate, Sundargarh, 117 (2014) CLT 99 (Orissa High Court)

- Bijaya Kumar Agarwala v. State of Orissa, AIR 1996 SC 263 (Supreme Court)

- Hindustan Steel Ltd. vs. State of Orissa, AIR 1970 SC 253 (Supreme Court)

Judgment:

The court dismissed the writ petition filed by the petitioner. The court observed that a final order had been passed under the provisions of the Central GST Act, 2017, and against the said order, the petitioners had a statutory remedy of appeal under Section 107 of the CGST Act. Therefore, in view of the availability of the statutory appeal remedy, the present writ petition filed by the petitioner was not maintainable.

The court clarified that it had not decided any issue on the merits of the case. However, it would be open for the petitioners to avail the statutory appeal remedy, and the present order would not be a hurdle for the said purpose.

FAQs:

Q1. What was the main reason for the dismissal of the writ petition?

A1. The main reason for the dismissal of the writ petition was the availability of a statutory appeal remedy under Section 107 of the Central GST Act against the final order passed in the proceedings.

Q2. Did the court decide the merits of the case?

A2. No, the court did not decide any issue on the merits of the case. It dismissed the writ petition solely on the ground of the availability of an alternative statutory appeal remedy.

Q3. Can the petitioner still challenge the detention order and penalty notice?

A3. Yes, the court clarified that the petitioners were free to avail the statutory appeal remedy, and the present order would not be a hurdle for that purpose.

Q4. What legal principles were established in this case?

A4. The case reaffirmed the legal principle that if a statutory appeal remedy is available against an order, a writ petition challenging that order is generally not maintainable.

Q5. What was the significance of the legal precedents cited in the case?

A5. The legal precedents cited, such as Hindustan Liver Limited and Another vs. The Collector and District Magistrate, Sundargarh, and Hindustan Steel Ltd. vs. State of Orissa, were relied upon by the petitioner to support their arguments. However, the court did not delve into the applicability of these precedents, as it dismissed the writ petition on the ground of the availability of a statutory appeal remedy.

Heard learned counsel for the petitioners and learned Standing Counsel.

By means of the present writ petition, the petitioners have challenged the

detention order dated 06.06.2019 and penalty notice dated 06.06.2019 broadly on the ground of jurisdiction of respondent no.2/Commissioner of State Tax, U.P., Lucknow under the Goods and Services Tax (GST) in seizing the consignment of goods, which were coming from Panipat (Haryana) to Lucknow.

Facts in brief of the present case are that the petitioner no.1 is the seller of the goods (cloud check) and is a registered dealer under GST having GSTIN 06AMUPK3123C1ZA. The said goods were sold by the petitioner

no.1 to the Vision Luxuries, which were loaded on the vehicle (Truck) of

petitioner no.2, who is owner of the same. The consignment of goods was

duly patronaged by the requisite docments viz. tax invoice and bilties. The

value of such goods was also declared. On 06.06.2019, opposite party

no.3/Assistant Commissioner, State Tax Department, Mobile Squad-2,

Lucknow has passed (MOV-06) detention order under Section 129 (1) of

Uttar Pradesh Goods and Sevices Tax Act (hereinafter referred to as

UPGST Act) and has also issued penalty notice (MOV-07) under Section 129 (3) of the UPGST Act.

Learned counsel for the petitioners while challenging the impugned orders

submits that no seizure can be made on the ground of the technical glitch

and unintentional proecedural lapse as the consignment was duly supported by all the documents. The E-Way Bill was successfully downloaded and duly accompanied along with the vehicle and the goods. The E-Way bill was valid when the consignment was intercepted. Hence, the present transaction was in the knowledge of the department prior to the interception of vehicle and therefore, it cannot be alleged that there was any intention to evade the payment of tax.

Further, submitted that there is no allegation with respect to any

discrepancy in the documents, which were accompanying the goods. The

validity of the E-Way Bill has not been doubted by the respondent authorities and the seizure has been made on the basis of suspicion. The

seizure is entirely based on surmises and conjectures and is, therefore, bad

in law.

As per the provisions of Section 129 of UPGST Act, 2017, the goods and

the conveyances can only be seized where any person transports any goods

in contravention of the provisions of the Act or the Rules made thereunder.

The term 'contravention' has not been defined under the GST legislation,

however, the same is construed in common parlance as the same is

violation of the provisions of law. It is imperative to note here that the

consignment in question was still in transit and the goods were not

delivered to the buyer. Further, the consideration with respect to such

consignment has not been received yet by the petitioner no.1 and

conspicuously, the supply of the goods is not concluded. The petitioner

no.1 continues to be owner of the goods and there cannot be said to be any

contravention of Section 129 of the UPGST Act, 2017.

The counsel for the petitioner placed reliance on the following judgments :-

Hon'ble Orissa High Court in the case of Hindustan Liver Limited and Another vs. The Collector and District Magistrate, Sundargarh, 117 (2014) CLT 99 has held as under :-

"16. If the above provision is considered in the light of the fact obtained

on record, it is to be seen that the truck was seized by the Marketing Officer at Vedavyas Chowk in front of Bhagabati Weigh Bridge and it has

not yet reached the destination or none had acknowledged receipt of the

consignment on behalf of the consignee. The transit therefore continued and the petitioner no.1 company for all purposes was the owner of the goods at the time of its seizure by the Marketing Inspector. It is not required to refer to different judicial pronouncements to burden the judgment so far as proposition that carrrying of goods in a vehicle does not amount to storage is concerned. In this regard reference may be made to Bijaya Kumar Agarwala v. State of Orissa, AIR 1996 SC 263.

17. Viewed from this perspective, as the petitioner no.1 company, who had

valid licence to deal with Vanaspati Dalda, continued to be the owner of the Vanaspati Dalda, no contravention can be held to have occasioned bythe time of seizure and the consequent order of confiscation is not sustainable in the eye of law."

Hon'ble the Apex Court in the case of Hindustan Steel Ltd. vs. State of

Orissa, AIR 1970 SC 253 has held that "Penalty shall not be imposed in

cases of technical or venial breach of the provisions of the Act. It was also observed that a provision to impose a penalty does not necessarily convey that penalty must be imposed in all cases."

Accordingly, it is submitted by learned counsel for the petitioner that the

detention order (MOV-6) dated 06.06.2019 as well as penalty notice

(MOV-7) dated 06.06.2019 passed by opposite party no.3 may be quashed.

Learned Standing Counsel on the basis of the instructions received to him

submits that in the proceedings based on the impugned notice, final order

has been passed under the provisions of CGST Act, 2017 and against the

said order, the petitioners have got a statutory remedy of appeal under

Section 107 of CGST Act, 2017. So, in view of the same, the present writ

petition filed by the petitioner is not maintainable and is liable to be

dismissed.

The fact pertaining to passing of final order has not been disputed by the

counsel petitioners.

In view of the fact that the final order has been passed against which

petitioners have got a statutory remedy of appeal, we are not inclined to

entertain the present writ petition.

For the foregoing reasons, the writ petition is dismissed.

However, it would be open for petitioners to avail the statutory remedy

and the present order would not be a hurdle for the said purpose.

It is made clear that we have not decided any issue on merits.

(Saurabh Lavania,J.) (Anil Kumar,J.)

Order Date :- 18.7.2019/Mahesh