M/S Ghs Traders And Anr vs. The Assistant Commissioner And Ors

The petitioners are before this Court seeking for the following reliefs:

Quashing the impugned order dated 25.07.2024 in Form GST MOV-06 passed by the 1st Respondent under Section 129(1) of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 (Annexure- 'A');

Quashing the impugned notice dated 01.08.2024 in Form GST MOV-07 issued by the 1st Respondent under Section 129(3) of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 (Annexure 'A-1');

Quashing the impugned order dated 12.08.2024 in Form GST MOV_09 passed by the 1st Respondent under Section 129(3) of the Karnataka Goods and NC: 2024:KHC-K:6612 services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 (Annexure 'A-2');

Directing the 1st and 3rd Respondent to forthwith effect the release of the goods and conveyance detained in terms of the impugned orders passed under Section 129 of the Karnataka Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017; or Alternatively,

Directing the 1st Respondent to consider the rectification application dated 14.08.2024 filed by the 1st Petitioner (Annexure 'R'), rectify the impugned order dated 12.08.2024 in Form GST MOV-09 by stating the penalty leviable under Section 129(1)(a), and consequently, effect the release of the goods and conveyance detained, as expeditiously as possible and in accordance with law; and

Pass such other or further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, and in the interests of justice and equity.

The petitioner claims to be a proprietary concern registered under GST Act with effect from 11.11.2023 engaged in the business of trading in arecanut sourced from agriculturalists and growers. The petitioner, after sourcing the said arecanut, supplies the same to its customers on which the petitioner has been making payment of the necessary taxes, including GST. NC: 2024:KHC-K:6612

One M/s.Aryan Traders, Delhi had sought for supply of arecanut by the petitioner in furtherance of which a purchase order is said to have been issued on 10.07.2024 as regards which petitioner No.1 raised the invoice on 13.07.2024 for supply of 24,500 kg. of arecanut (Rs.104/- per kilo gram) and these arecanut was handed over to M/s.Lion Transport for delivery to the consignee/purchaser at Delhi. The goods under transit during transport was intercepted by respondent No.2-Sub-Inspector Police at Kamalanagar, Bidar District and the said goods were detained by respondent No.2, firstly, on the ground that there was no e-way bill produced and secondly, on the ground that there is under valuation made of the goods in question, namely, arecanut. Summons having been issued under Section 70 of the Act for alleged evasion of tax, the petitioner No.1 appeared before respondent No.1 and furnished a statement which was not accepted and a detention order was passed on 25.07.2024 at Annexure-A1 and penalty NC: 2024:KHC-K:6612 imposed in terms of notice dated 01.08.2024 at Annexure-A2. A show cause notice proposing to impose penalty was issued on 01.08.2024 at Annexure-A2. Reply is stated to have been submitted on 12.08.2024. However, the impugned order came to be passed on 12.08.2024 at Annexure-A3. The petitioners are before this Court contending that penalty has been imposed by regarding the petitioners as a third party and not as a consignor in terms of the Circular bearing No.GST- 11/2018-19 dated 31.12.2018, whereunder a consignor or a consignee is required to be considered as the owner in terms of Section 129(1) of the KGST Act.

The submission of Sri.Sandeep Huilgol, learned counsel for the petitioners is that once the petitioner is regarded to be an owner, then in terms of decision of a Coordinate Bench of this Court in the case of Chelaram S/o Dargaram G vs. The State of NC: 2024:KHC-K:6612 Karnataka and others1, penalty can be imposed at twice the tax and not more as done in the impugned order. In that background, he submits that the petitioner is willing to, without prejudice to his rights, make payment of penalty to the extent of twice the tax on the goods if the goods are released in favour of the petitioners.

Sri.Malhar Rao, learned Additional Advocate General would submit that the valuation of the goods which have been made under the invoice is less than the market value, and it is in that background that the show cause notice also takes note of the under valuation of the goods and as such, he submits that if at all, the petitioners would have to make payment of penalty at twice the tax leviable on the market value of the goods as determined by the authorities.

Sri.Sandeep Huilgol, learned counsel for the petitioners, once again without prejudice, would submit that the petitioners are willing to make payment as submitted by the learned Additional Advocate General. His submission is placed on record.

In view of the aforesaid submissions, the circular bearing No.GST-11/2018-19 dated 31.12.2018 and the order of the Coordinate Bench dated 22.02.2014 in W.P.No.200582/2024, I pass the following: ORDER i) The Writ Petition is partly allowed. ii) The petitioners are permitted to make payment of tax and penalty under Section 129(1)(a) of the CGST Act 2017, calculated on the market value as determined by the authorities within a period of one week from today. On receipt of the said amounts, the respondent No.1 is directed to release the vehicle bearing No.MH- NC: 2024:KHC-K:6612 40-CM-9089 along with the goods which have been retained by respondent No.1-authority under the impugned order within a period of seven days thereafter. iii) The impugned order having been passed without consideration of the reply dated 12.08.2024, the matter is remitted to respondent No.1 to consider the said reply and pass fresh orders in accordance with law. iv) The payment of the aforesaid amounts as indicated is without prejudice to the rights of both the parties in terms of the order to be passed by the first respondent. v) Needless to state that this Court has not expressed any opinion on the merits of the matter. (SURAJ GOVINDARAJ) JUDGE