REPORTING BY PRODUCER OF CINEMATOGRAPHIC FILMS, DOCUMENTARY PRODUCTION, OTT, EVENT MANAGEMENT ETC. UNDER INCOME TAX ACT, 1961
September 19, 2022MISTAKE WHILE GENERATING E-WAY BILL WAS AN INADVERTENT HUMAN ERROR: MADHYA PRADESH HIGH COURT
September 23, 2022THE POWER OF CONFISCATION BEING THE ULTIMATE AND THE MOST EXTREME PUNISHMENT CAN ONLY BE INVOKED IN EXTRA ORDINARY CIRCUMSTANCES: KARNATAKA HIGH COURT
In the case of M/s Rajeev Traders Vs. Union of India [Write Petition No. 100849 of 2022 (T-RES) dated August 16,2022], The Hon’ble Karnataka High Court allowed the writ petition that In the cases where the power to ispect, seize or detain the goods and conveyances is invoked either under Section 67 or Section 129 of CGST Act, the power to confiscate under section 130 of the CGST Act would not be available.
FACTS
M/s Rajeev Traders (‘The Petitioner”) transported seven trucks containing Areca nuts and The Assessing Officer (“The Respondent”) intended to inspect the conveyance, goods and documents and he accordingly passed an order for physical verification of the conveyance, goods and documents on the same day and issued Form GST MOV-02 and stating that the person in charge of the conveyance had not tendered any documents and e way bill for the goods in movement and prima facie the documents tendered were found to be defective on 13.09.2021
The very next day, on 14.09.2021, on physical verification it was found that there was a difference in the quantity mentioned in the invoice and the quantity found and the officer passed an order of detention on 28.09.2021 under Section 129 of the CGST Act in Form GST MOV-06.
On 29.09.2021, the Deputy Director,proceeded to issue a notice for confiscation of goods, conveyances and levy of penalty under Section 130 of the CGST Act, in Form GST MOV-10. The Petitioner submitted a reply dated 27.10.2021 to Form GST MOV-10. After granting a personal hearing to the Petitioner a confiscation order vide Form GST MOV-11 dated 24.11.2021 (“the Impugned order”) was passed under Section 130 of the CGST Act.
Being aggrieved by the order of confiscation, the petitioner preferred an appeal to the Joint Commissioner, under sub-section (11) of Section 107 of the CGST Act. 9. The Appellate Authority, on consideration of the appeal, concurred with the view taken by the Deputy Director and proceeded to dismiss the appeal.As against the said order passed in appeal, though an appeal is provided to the appellate authority under sub-section (1) of Section 112 of the CGST Act, since the Appellate Tribunal has not been constituted, the petitioner is before this Court by way of this writ petition.
ISSUE RAISED
“Whether the Proper officer, while detaining the goods which are in transit in the exercise of his power under Section 129 of the Act, possess the power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods?”
JUDGEMENT
In this case, the goods were intercepted while in transit on 13.09.2021 and the proper officer also passed an order of detention on 28.09.2021 (MOV-6) and on the passing of this order, the owner of the goods or the owner of the conveyance secured a right under Section 129 to get the goods released. However, the proper officer, thereafter proceeded to issue a notice of confiscation (MOV-10). Thus, the proper officer basically nullified the statutory right of the owner of the goods or the non-owner to get the goods released on compliance with the conditions specified in Section 129(1) (a) to (c), which would render the entire confiscatory proceedings illegal.
The proper officer has thereafter proceeded to issue a notice of confiscation of both the goods and conveyances on five grounds.
| S. No. | Grounds on which notice of confiscation issued by Respondent | High Court Held |
| 1 | An e-way bill had not been generated with the intent to evade payment of tax. | The goods were accompanied by a tax invoice, which indicated payment of tax but an E-way bill had not been generated. Thus, the proper officer could have only imposed a penalty of ten thousand rupees or the amount equivalent to the tax evaded.
|
| 2. | The goods appeared to be grossly undervalued (when compared to the valuation report submitted by CAMPCO) with the intent to evade payment of tax | The value of the supply of goods would be the transaction value and a transaction value would be the price that is paid or payable for the supply of goods. When the supplier and recipient are not related and the price is the sole consideration of the supply, then for the purpose of the Act, the transaction value i.e., the price actually paid would be the value of the goods that is sought to be supplied. In the light of this particular definition of the value of taxable supply in Section 15, the authorities could not have proceeded on the assumption that there was an undervaluation. |
| 3. | The weight of the goods was mis-declared with the intent to evade payment of tax | As far as the mis-declaration of the weights of the goods is concerned, as the same amounted to an offence as prescribed under Section 122(1)(i) , the proper officer could impose the penalty as prescribed in Section 122 and that could not entitle him to invoke his power to confiscate the goods itself. |
| 4. | The grade and quality of areca nuts were not mentioned in the invoice with the intent to evade payment of tax | It is also to be stated here that in the notification which notified the rates of tax, the description of the goods was only stated as ‘areca nuts’. The notification did specify different rates of tax for different kinds of areca nuts and the Rules also did not require the grade or quality of the areca nuts to be mentioned in the invoice. In other words, when the statutory notification prescribes a particular rate of tax for areca nuts and as described therein, it was not permissible for the authorities to take the view that the grade and quality of areca nuts had also to be declared.
|
| 5. | There were non-existent suppliers and recipient which was discovered during the investigation and follow-up searches | The fifth ground that there was a nonexistent/dummy supplier and a recipient can only be a ground for determination of tax under Section 74 and cannot really be raised and determined in a confiscatory proceeding, given the fact that the petitioner was a registered person and its registration had been accepted by the Department.
|
Further, observed that the entire procedure adopted by the proper officer from converting the detention proceedings into a confiscatory proceeding, ultimately leading to the order of confiscation is wholly illegal and contrary to the statutory scheme of the Act.
Concluded that, since the confiscated goods were already sold in a public auction, the Respondents were directed to pay the Petitioners(the owner of the goods), the sale proceeds of the auction after deducting the penalty prescribed under Section 129(1)(a) of the Act, within a period of four weeks from the date of receipt of a certified copy of this order.
