Court orders release of seized goods and vehicle after assessee agrees to pay excess tax and penalty.

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Case Name:

U.P. Bone Mills Private Ltd. (Steel Division) Works And Another Vs. Union Of India And 3 Others (High Court of Allahabad)

Writ Tax No. 1324 of 2019

Date: 6th December 2019

Key Takeaways:

- Vehicle owners cannot avoid liability for tax violations by claiming non-involvement with the goods.

- Authorities must release seized goods and vehicles if the assessee agrees to pay excess tax and penalties after assessment.

- The court rejected segregating liabilities for goods and vehicles seized together under tax laws.

- Assesses should obtain proper board resolutions to support statements made in court regarding payment of dues.

Issue:

Whether the petitioner company, as the registered owner of the vehicle, can avoid paying the amount imposed under the GST Act for the release of its seized vehicle and goods, despite claiming no involvement with the transported goods.

Facts:

The petitioner company approached the court seeking the release of its vehicle and goods detained on 8th November 2019 by tax authorities in Kanpur. A penalty was imposed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, for the release of both goods and vehicle. The petitioner argued that being merely the registered vehicle owner, it had no involvement with the transported goods and should not be liable to pay the amount.

Arguments:

Petitioner’s Arguments: As a mere registered owner uninvolved with the goods, the petitioner claimed it should not be liable to pay the penalty under Section 129(3) for the vehicle’s release.

Revenue’s Arguments:

The heading of Section 129 “Detention, seizure and release of goods and conveyances in transit” covers seizure of vehicles along with goods. Therefore, the petitioner cannot avoid liability for the vehicle’s release.

Key Legal Precedents:

The court did not cite any specific previous cases as legal precedents. However, it relied on the language of Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017, particularly its heading, to arrive at the decision.

Judgement:

The court dismissed the writ petition, holding that the petitioner could not “wriggle out of his liability to pay the amount as imposed in terms of section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017, for the purpose of release of his vehicle.” However, the court directed the authorities to calculate the excess amount, including penalty, required to be paid by the petitioner. If the petitioner made the full payment, the authorities were ordered to release the seized goods and vehicle in accordance with the law. The dismissal did not prevent the petitioner from availing statutory appellate remedies.

FAQs:

Q1. Can a vehicle owner avoid penalties related to seized goods by claiming non-involvement?

A1. No, according to this judgment, the vehicle owner cannot avoid liability for penalties under Section 129 of the GST Act by claiming non-involvement with the seized goods.

Q2. What is the significance of the heading of Section 129 in this case?

A2. The court relied heavily on the heading “Detention, seizure and release of goods and conveyances in transit” to conclude that Section 129 covers seizure and release of both goods and vehicles, preventing segregation of liabilities.

Q3. Can the petitioner appeal this decision?

A3. Yes, the court clarified that the dismissal of the writ petition does not prevent the petitioner from availing statutory appellate remedies available under the law.

Q4. What legal principle did the court establish in this case?

A4. The court established that vehicle owners cannot have the benefit of segregated liabilities for goods and vehicles seized together under Section 129 of the GST Act. They must follow the prescribed procedure and pay the penalty for the vehicle’s release, regardless of their involvement with the goods.

Having heard the learned advocates for the parties and upon perusing the instant writ petition, we find that the subject matter of challenge in the instant writ proceedings is in respect of notices dated 14/15th November, 2019 and 18th November, 2019. The two notices have been issued by the Superintendent of Central Goods and Services Tax, Division Ist, Muzaffarnagar, and the Assistant Commissioner, Central Goods and Services Tax Division 1st, Muzaffarnagar, respectively.

The main grievance of the writ petitioners is that the concerned authorities have seized the goods along with the vehicle/truck illegally on the basis of the sole allegation that the driver/owner/person In-charge of the goods had not tendered any document, e-way bill, etc., even when all the valid documents were actually produced before the officer by the driver.

In paragraph 12 of the writ petition, the writ petitioners have stated that they were ready to pay the excess amount after assessment. However, we are unable to understand as to how such a statement could be made by the writ petitioners in the absence of any resolution of the Board of Directors in support thereof.

Be that as it may, since the writ petitioner no.1, being the company, is ready to pay the excess amount after assessment as may be determined by the concerned officer, we dispose of this writ petition with a direction upon the concerned respondent authority to calculate the excess amount which is required to be paid by the writ petitioner together with penalty, if any, and communicate the same to the writ petitioner within a period of three weeks from date. If the writ petitioner / company makes full payment in terms of such communication to the concerned respondent authority within a week therefrom, the goods as well as vehicle may be released in favour of the writ petitioners in accordance with law.

Order Date :- 6.12.2019

Ashish/Monika

(Biswanath Somadder, J.)

(Ajay Bhanot, J.)