M/S K Anil Jewelers Jain Bazar Jammu Th Anil Kumar Bhukmaria vs. U T Of J And K Th Commissioner State Taxes J And K Bahu Plaza Jammu And Others

Held

The Court held that the petitioner's case was weakened by the non-possession of a valid delivery challan as prescribed under the rules. The petitioner admitted before the STO that the goods were for sale on approval and a letter from the consignor was misplaced. The petitioner also voluntarily signed a declaration stating ownership of the goods and readiness to pay applicable tax and penalty. This declaration, along with the voluntary deposit of tax and penalty, indicated the absence of a valid delivery challan at the time of interception. The Court found the plea of duress to be an afterthought, as it was not raised before the appellate authority and was contradicted by the written declaration. The Court concluded that the non-possession of a valid delivery challan and the voluntary payment of tax and penalty were sufficient grounds to dismiss the petition. The impugned orders were found to be without infirmity.

Facts

The petitioner, M/S K. Anil Jewellers, challenged an order by the State Taxes Officer (STO) and the subsequent order by the Deputy Commissioner, State Taxes, Appeals-I. The STO intercepted a vehicle carrying the petitioner's gold ornaments worth Rs. 77,96,650.10 on 03.01.2020. The vehicle was accompanied by a delivery note, which the STO deemed invalid for goods movement under the GST Act. The STO detained the vehicle and goods, issuing a notice for tax and penalty. The petitioner responded, stating the goods were for sale on approval and the necessary letter was misplaced. The STO imposed tax and penalty totaling Rs. 116965.00 under State/UT Tax, Rs. 116965.00 under CGST, and Rs. 2,33,930/- as penalty. The petitioner's appeal to the appellate authority was dismissed.

Key Issues

1. Whether the STO was justified in detaining and seizing the goods and imposing tax and penalty under Section 129 of the GST Act, 2017, when the goods were accompanied by a delivery note and intended for sale on approval, not a supply, and whether the STO followed the prescribed procedure and GST Circulars. Petitioner's arguments: The STO failed to apply her mind judiciously, did not follow the procedure as per GST Circular dated 13.04.2018, and did not provide a reasonable opportunity. The goods were detained in interstate movement, and if there was a supply, IGST would apply, not CGST/SGST. Since there was no supply, the penalty under Section 129 is void. A delivery note/challan is for movement, not supply, and thus Section 129 is inapplicable. The STO allegedly obtained a cheque forcibly under threat. Revenue's arguments: The appellate authority found that a self-invented delivery note was used instead of a prescribed delivery challan, which is a clear violation. Circular No. 10/10/2017 GST does not provide a substitute for the prescribed delivery challan.