M/S Exide Industries LTD. Lucknow Thru. Authorised Signatory Mr. Shri Nath Tiwari vs. Addl. Commissioner Grade-Ii (Appeal)-1, State Tax, Mainpuri And Another

Held

The Court held that the impugned order dated 06.03.2024 cannot be sustained in law and is hereby quashed. The reasoning was based on several points. Firstly, the Court noted that the truck driver's statement, as recorded in GST MOV-01 by the revenue authority, did not contain any mention of unloading goods at a place not shown in the tax invoice. Secondly, the Court observed that under the GST Act, there is no specific provision that binds a selling dealer to disclose the route for transportation of goods. The legislature's wisdom in deleting such a provision from the previous VAT Act was considered significant. Therefore, authorities were not correct in passing a seizure order even if the vehicle was not on the regular route. Thirdly, the power of detention and seizure can only be exercised when goods are not accompanied by genuine documents, and in this case, the genuineness of the documents (tax invoice and e-way bill) was not disputed. The Court also referred to the judgments of the Karnataka High Court in M/s Karnataka Traders and the Telangana High Court in Vijay Metal, which supported the view that mechanical detention based on route deviation or undervaluation without cogent material is not permissible. The ratio decidendi is that in the absence of specific provisions mandating route disclosure and with genuine accompanying documents, deviation from a perceived 'regular' route is not a sufficient ground for imposing penalty or seizing goods under the GST Act.

Facts

M/s Exide Industries Ltd. (petitioner) transported 722 pieces of batteries and other items from Lucknow to Auraiya and Etawah. The goods were accompanied by tax invoices and e-way bills and were handed over to M/s Ravindra Road Carriers. The vehicle was intercepted at Firozabad, which the authorities deemed not to be on the route to the stated destinations. The Assistant Commissioner imposed a penalty of Rs. 1,22,760/- on the estimated value of goods at Rs. 2,83,468.33 for alleged violation of GST Rules. The petitioner's appeal before the Additional Commissioner, Grade-II (Appeal), Trade Tax, Mainpuri, was rejected by an order dated 06.03.2024, which is now challenged in this writ petition.

Key Issues

1. Whether the interception of the vehicle and imposition of penalty under the GST Act is justified solely on the ground that the vehicle was not on the prescribed route to its destination, when no specific route is mandated by the Act and the accompanying documents are genuine? (Question of law and mixed fact and law, turning on Rule 129 of the SGST Rules, 2017 and the absence of a specific route disclosure provision in the GST Act). Petitioner's arguments: The goods were accompanied by genuine documents (tax invoices, e-way bills). There is no specific provision in the GST Act requiring disclosure of the transportation route, unlike the previous VAT Act. Merely being intercepted at Firozabad, which is in proximity to one of the destinations, does not constitute a violation. Reliance was placed on Gujarat High Court in M/s Karnataka Traders Vs. State of Gujarat and Telangana High Court in Vijay Metal Vs. Deputy Commercial Tax Officer. Respondent's arguments: The truck driver's statement indicated goods were to be unloaded at Auraiya and Etawah, which contravened the provisions of the Act. The vehicle was intercepted at a location not on the intended route, suggesting an intention to evade tax.