M/S Exide Industries LTD. Thru Employee And 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 March 6, 2024, could not be sustained in law and was quashed. The Court found that the goods were accompanied by genuine documents, including tax invoices and e-way bills, the genuineness of which was not disputed. The Court noted that the GST Act does not contain a specific provision binding a selling dealer to disclose the route during transportation, unlike the previous VAT Act. The legislature's decision to delete such a provision indicated that authorities were not correct in passing a seizure order even if the vehicle was not on a regular route. The Court also observed that the truck driver's statement, as recorded by the revenue authority, did not mention any intention to unload goods at places not shown in the tax invoice. Furthermore, the Court referred to the judgments of the Karnataka High Court in M/s Karnataka Traders and the Telangana High Court in Vijay Metal, which held that mechanical detention based solely on the vehicle's direction or alleged undervaluation cannot be a ground for seizure. The Court concluded that once the accompanying documents were found to be genuine, the goods ought not to have been seized.

Facts

M/s Exide Industries Ltd. (the petitioner) is challenging an order dated March 6, 2024, by the Additional Commissioner, Grade-II (Appeal), Trade Tax, Mainpuri, which rejected their appeal and imposed a penalty of Rs. 4,06,152/-. The dispute arose when the petitioner's vehicle, transporting 118 pieces of batteries and other items from Varanasi to various registered dealers in Lalitpur, Orai, and Kasganj, was intercepted at Toll Plaza, Tundl, Firozabad. The authorities were dissatisfied because Firozabad was not considered the direct route to the stated destinations. The Assistant Commissioner (MS) Unit-1, State GST, Firozabad, had previously imposed the penalty on August 15, 2023, on an estimated goods value of Rs. 929,273.57, citing a violation of Rule 129 of the SGST Rules, 2017.

Key Issues

1. Whether the interception of the vehicle and subsequent imposition of penalty were justified solely on the ground that the vehicle was intercepted at a location not on the direct route to the stated destinations, despite the goods being accompanied by genuine tax invoices, e-way bills, and other necessary documents? (Question of law and fact, concerning the interpretation and application of GST provisions related to interception and penalty). Petitioner's Arguments: The petitioner argued that the goods were accompanied by genuine documents and were on their way to their final destinations. They contended that there is no specific provision under the GST Act requiring disclosure of the exact route for transportation, unlike the previous VAT Act. Merely being intercepted at Firozabad, which is in close proximity to Kasganj (one of the destinations), does not constitute a violation. They relied on judgments from the Gujarat High Court in M/s Karnataka Traders Vs. State of Gujarat and the Telangana High Court in Vijay Metal Vs. Deputy Commercial Tax Officer. Respondent's Arguments: The respondents supported the impugned orders, arguing that the truck driver's statement indicated the goods were to be unloaded at places not mentioned in the tax invoice, which contravened the provisions of the Act. They prayed for the dismissal of the writ petition.