Kamlesh Steels vs. The Deputy State Tax Officer And 2 Others

Held

The Court held that the detention of the vehicle at IDA Jeedimetla, despite the presence of a tax invoice and e-way bill, was in violation of the provisions of the GST Act and Rules, particularly Rule 68, and the circulars issued by the Central Board of Indirect Taxes and Customs. The Court found that the reasons provided for detention, such as the vehicle being found at a different location than its stated destination, did not, by themselves, constitute a taxable event or indicate an intention to evade tax. The Court noted that the respondent did not establish that any sale of goods was being done without paying applicable tax at IDA Jeedimetla. Furthermore, the Court found no material to suggest any attempt by the petitioner to sell goods in the local market at IDA Jeedimetla, evading GST. The Court relied on the Supreme Court's observation in Dabur India Ltd. Vs. State of Uttar Pradesh, stating that a litigant cannot be coerced into making payments of duties they contend are not leviable. The Court also dismissed the respondent's reliance on the subsequent e-way bill, finding it was for job work purposes. The Court concluded that the payment was made under protest and duress, not voluntarily, negating any plea of estoppel. Consequently, the Court declared the action of the respondent in detaining the vehicle and collecting tax and penalty as illegal, arbitrary, and violative of constitutional provisions and the GST Act.

Facts

The petitioner, Kamlesh Steels, a trader in steel, purchased material from Steel Authority of India Limited (SAIL) in Tamil Nadu. While the goods were in transit to Secunderabad, the vehicle was detained on January 21, 2020, at IDA Jeedimetla, Hyderabad, by the Deputy State Tax Officer. The detention was based on a notice stating that the documents were defective and there was a mismatch between the goods in movement and the documents, as the vehicle was checked at IDA Jeedimetla instead of its destination in Secunderabad. The petitioner argued that the goods were being transported to various destinations in Hyderabad, and all trucks assembled at IDA Jeedimetla before proceeding to their final locations. The driver was waiting for the vendor's representative when the vehicle was detained, despite possessing a tax invoice and an e-way bill valid from January 11, 2020, to January 27, 2020. After representations and no response, the petitioner paid Rs. 4,70,314/- as tax and Rs. 4,70,314/- as penalty under protest on January 25, 2020, to secure the release of the goods and vehicle. No formal order was passed by the respondent.

Key Issues

1. Whether the detention of the goods and vehicle by the Deputy State Tax Officer at IDA Jeedimetla, Hyderabad, on January 21, 2020, was illegal, arbitrary, and violative of Articles 14 and 301 of the Constitution of India, and the provisions of the GST Act and Rules, despite the petitioner possessing valid documents. Petitioner's arguments: The petitioner contended that the detention was illegal as all required documents, including the tax invoice and e-way bill, were available with the driver. The vehicle was stopped at IDA Jeedimetla, a transit point where vehicles assemble before proceeding to various destinations in Hyderabad, and the driver was waiting for the vendor's representative. The payment of tax and penalty was made under coercion and protest due to the threat of disturbing the delivery schedule. Section 129 of the Act is not attracted as there was no intention or possibility of tax evasion. The respondent failed to establish any attempt to evade tax. Revenue's arguments: The respondent argued that the driver did not mention delivery at Secunderabad, and the Form GST MOV-06 recorded at the time of detention did not mention it. The statement of the driver was recorded as per the Act. The respondent denied that the driver submitted the invoice and e-way bill in support of movement to Jeedimetla instead of Secunderabad, which led to the detention. The respondent also contended that the petitioner voluntarily uploaded another e-way bill on January 26, 2020, for the same goods to be delivered in IDA Jeedimetla, indicating an intention to evade tax.