M/S Samira Enterprises vs. State Of U P And 2 Others

Held

The Court held that the proceedings under Section 129(1)(b) of the CGST Act were not sustainable. The record showed that the goods were accompanied by the requisite documents, including a tax invoice, GR, and E-way Bills, with Ghaziabad clearly mentioned as the dispatch place. The petitioner's reply, stating the purchase was from a Ghaziabad dealer with due entries in their accounts, was not denied. The State failed to provide any material to demonstrate that the goods were purchased from a non-bonafide dealer or that there was any intention to evade tax. The Court reiterated the principle from Circular no. 64/38/2018-GST that proceedings under Section 129 are initiated when documents are not accompanying the goods, which was not the case here. Furthermore, relying on its previous judgments in M/s Margo Brush India and M/s Riya Traders, the Court held that Section 129(1)(b) cannot be invoked when the consignor, with proper tax invoice and E-way bill, claims ownership of the goods. Consequently, the impugned orders were quashed. The authority was directed to refund the deposited amount within one month.

Facts

M/s Samira Enterprises, a registered dealer in MS scrap, sold goods to M/s Himgiri Ispat Pvt. Ltd. The goods, accompanied by tax invoice no. 0183 dated 16.11.2021 and E-way Bill no. 7112 2331 1139 dated 16.11.2021, were intercepted on 17.11.2021 at Muzaffarnagar, UP. GST MOV-1 and MOV-2 were issued, leading to detention. The petitioner submitted a reply stating no contravention of GST provisions. However, GST MOV-4, MOV-6, and MOV-7 were issued on 19.11.2021, quantifying tax and penalty, and detaining the goods. An order dated 30.11.2021 was passed imposing tax and penalty. The petitioner's appeal was dismissed by an order dated 09.12.2021. The petitioner sought setting aside of the appellate order and refund of deposited tax and penalty amounting to Rs. 5,02,890.00, along with interest and release of detained goods.

Key Issues

1. Whether the proceedings under Section 129(1)(b) of the CGST Act were rightly initiated against the petitioner when proper documents accompanied the goods and the petitioner, as consignor, claimed ownership? Petitioner's arguments: The petitioner contended that all necessary documents, including tax invoice and E-way Bill, were accompanying the goods. Reliance was placed on Circular no. 64/38/2018-GST dated 14.9.2018, which states that proceedings under Section 129 may be initiated only if tax invoice or E-way Bill is not accompanying the goods. Furthermore, clause 6 of notification no. 76/50/2018-GST dated 31.12.2018 clarifies that if the invoice or specified document accompanies the consignment, the consignor or consignee should be deemed the owner. The petitioner also cited judgments of this Court in Riya Traders and M/s Margo Brush India, holding that Section 129(1)(b) cannot be invoked when the consignor claims ownership and has provided proper documentation. Respondent's arguments: The respondent supported the impugned order, arguing that proceedings were rightly initiated. They claimed the petitioner's stand was self-contradictory, as the E-way bill indicated movement from Ghaziabad to Delhi, then to Uttarakhand, suggesting an attempt to avoid tax payment if the goods had not been intercepted.