M/S Texmaco Rail And Engineering LTD vs. Union Of INDIA And Ors

Held

The Court noted that the writ petition primarily challenged a show cause notice. Although the petitioner had filed a reply, they intended to file a detailed reply. Without expressing any opinion on the merits of the case, the Court deemed it appropriate to dispose of the writ petition at that stage. The petitioner was granted liberty to file a detailed reply to the show cause notice, and the respondents were directed to consider it before determining the tax. The respondents were also directed not to finalize the imposition of penalty in the meantime. Additionally, considering the petitioner's submission that the imported machinery, if not fixed and used, could lead to logistic misuse, the Court directed the respondents to immediately release the machinery and equipment, subject to the deposit of a bank guarantee or any other acceptable measure to the satisfaction of the respondents.

Facts

M/s Texmaco Rail and Engineering Ltd. (the petitioner) entered into a contract to supply hydro mechanical plant and equipment for a project in Himachal Pradesh. The petitioner imported equipment from Netherland, cleared it at JNCH Nhava Sheva Port, Mumbai, paying applicable import duties including IGST. The goods were then sent directly from Mumbai to the project site in Himachal Pradesh via three vehicles, with e-way bills generated based on delivery challans. One vehicle, carrying e-way bill No. 8111 1951 2407 dated 09.10.2020, was intercepted on 27.11.2020 in Chamba, Himachal Pradesh. The officer found the goods were accompanied by a delivery challan but not a tax invoice. A show cause notice under Section 129(3) of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017 was issued to the petitioner, which was challenged via a writ petition.

Key Issues

1. Whether the respondents have the jurisdiction to pass the impugned detention order/notice, particularly concerning the movement of goods from Mumbai to Himachal Pradesh, given the petitioner's contention regarding the nature of the transaction and the applicable tax provisions. Petitioner's arguments: The petitioner challenged the show cause notice on various grounds, including that the respondents lacked the jurisdiction to issue it. Respondents' arguments: The respondents contended that the writ petition was not maintainable as the impugned show cause notice was appealable and the petitioner should file a reply to the notice rather than invoking writ jurisdiction. They also argued that the petitioner could not invoke writ jurisdiction as only a show cause notice was challenged.