Court orders release of goods detained for minor e-way bill discrepancy after dealer furnishes indemnity bond.

Case Name:

M/S Bajrang Enterprises Vs Union Of India And 3 Others

Court No. 29

Case: Writ Tax No. 1397 of 2018

Key Takeaways:

- The court recognized that detaining goods for a minor e-way bill discrepancy, such as an error in the vehicle number, was unjustified.

- It relied on a Government of India circular stating that minor discrepancies should not lead to proceedings under the GST Act.

- The court ordered the release of goods upon the registered dealer furnishing an indemnity bond covering the proposed tax and penalty liability.

Issue:

Whether the detention of the petitioner's consignment of mustard seeds under Section 129(1) of the Central Goods and Services Tax (CGST) Act, 2017, was justified when the sole reason was a minor discrepancy in the vehicle number mentioned on the e-way bill.

Facts:

- The petitioner, a registered dealer from Madhya Pradesh, was transporting 20,000 kg of mustard seeds from Madhya Pradesh to Uttar Pradesh.

- The consignment was intercepted and detained by the GST authorities in Uttar Pradesh on 24.10.2018 under Section 129(1) of the CGST Act, 2017.

- The detention was solely because the vehicle number did not match the one mentioned on the e-way bill, even though the petitioner had paid the requisite tax, as per the invoice.

- A notice under Section 129(3) of the CGST Act, 2017, was issued to the petitioner, requiring them to deposit 50% of the penalty under the CGST Act and the Uttar Pradesh GST (UPGST) Act for the release of the goods.

Arguments:

- The petitioner's counsel, Sri Aloke Kumar, argued that the detention was unjustified as it was due to a minor discrepancy in the vehicle number on the e-way bill.

- Kumar relied on the Government of India's circular dated 14.09.2018, which stated that minor discrepancies like errors in one or two digits/characters of the vehicle number should not lead to proceedings under the Act.

- He further submitted that the e-way bill could not be downloaded initially but was subsequently produced after downloading it on 24.10.2018, which was valid until 2nd November 2018.

Key Legal Precedents:

The court relied on the Government of India's circular dated 14.09.2018, issued by the Ministry of Finance, Department of Revenue Central Board of Direct Taxes and Customs GST Policies Wing, which modified the earlier circular dated 13.04.2018.

Judgement:

The court disposed of the writ petition with the direction to the respondents (authorities) to release the goods and the vehicle of the petitioner forthwith upon the petitioner furnishing an indemnity bond equivalent to the amount of the proposed tax liability of Rs. 28,000 and a penalty of Rs. 25,000 mentioned in the notice under Section 129(3) of the Act.

The court clarified that it had not expressed any opinion on the merits of the detention/seizure order or on the amount of tax or penalty proposed to be imposed by the authority concerned. The amount deposited by the petitioner would abide by the final order to be passed in the consequential proceedings by the authorities.

FAQs:

Q1: What was the reason for the detention of the petitioner's goods?

A1: The petitioner's consignment of mustard seeds was detained under Section 129(1) of the CGST Act, 2017, solely because the vehicle number did not tally with the number mentioned on the e-way bill.

Q2: What was the court's decision in this case?

A2: The court disposed of the writ petition and directed the authorities to release the goods and vehicle forthwith upon the petitioner furnishing an indemnity bond equivalent to the proposed tax liability of Rs. 28,000 and a penalty of Rs. 25,000 mentioned in the notice under Section 129(3) of the Act.

Q3: What legal precedent did the court rely on?

A3: The court relied on the Government of India's circular dated 14.09.2018, issued by the Ministry of Finance, Department of Revenue Central Board of Direct Taxes and Customs GST Policies Wing, which stated that minor discrepancies like errors in one or two digits/characters of the vehicle number should not lead to proceedings under the Act.

Q4: What was the significance of the petitioner being a registered dealer?A4: The fact that the petitioner was a registered dealer and had paid the requisite tax, as per the invoice, supported their case that the detention was unjustified and was solely due to a minor discrepancy in the vehicle number on the e-way bill.

Q5: What is an indemnity bond, and why was the petitioner required to furnish one?

A5: An indemnity bond is a legal instrument that provides a guarantee or security against potential losses or liabilities. In this case, the petitioner was required to furnish an indemnity bond equivalent to the proposed tax liability and penalty mentioned in the notice under Section 129(3) of the Act as a condition for the release of their goods and vehicle.

Heard Sri Aloke Kumar, learned counsel for the petitioner.

The consignment of the petitioner who is a dealer of Madhya Pradesh of 20,000 Kg. of mustered seeds has been detained by GST authorities on 24.10.2018 under Section 129 (1) of the Central Goods and Service Tax Act, 2017 and in pursuance thereof a notice under Section 129(3) dated 24.10.2018 has been issued to the petitioner requiring him to deposit 50-50% of the penalty of the tax both under the Central GST and U.P. GST on the value of the goods for the purposes of release of the goods.

The submission of Sri Aloke Kumar, learned counsel for the petitioner is that on the aforesaid item GST @ 5% is chargeable and therefore the tax incidence comes to Rs.28,000/- only. He further submits that E-way bill could not be down loaded but it was subsequently produced after down loading it on 24.10.2018 which is valid upto 2nd November 2018.

In view of the aforesaid facts and circumstances, without entering into the merits of the detention order we direct for the release of the goods of the petitioner and the vehicle on deposit of the proposed amount of tax of Rs. 28,000/- and Rs. 25,000/- towards penalty and on deposit of the aforesaid amount the petitioner would be permitted to down load a fresh E way bill so that his goods may be pass through the State of U.P. by 5th November 2018.

It may be clarified that we have not expressed any opinion on the merits of the detention/seizure order or on the amount of tax or penalty which is proposed to be imposed by the authority concerned. The amount so deposited by the petitioner would abide by the final order to be passed in the consequential proceedings by the authorities.

The writ petition is disposed of accordingly.

Order Date :- 29.10.2018