Detaining a vehicle and forcing taxpayer to pay tax and penalty on the sole ground that the vehicle is found at a wrong destination without anything more is illegal: Says High Court.
 

Contenions of Petitioner

Petitioner contends that the action of the 1st respondent in detaining the vehicle containing the goods of the petitioner on 22-01-2020 at IDA Jeedimetla and then demanding that petitioner should pay tax and penalty as per the provisions of the Act though all the required documents were available with the driver of the vehicle and later releasing it on 25-01-2020 only after collecting from the petitioner ₹ 9,40,428/- towards tax and penalty, is illegal, arbitrary and violative of Article 14 of the Constitution of India as well as Article 301 of the Constitution of India, and seeks a direction to the 1st respondent to refund the tax and penalty illegally collected from the petitioner.

It is the contention of the petitioner that 1st respondent had forcibly taken Ex. P5 statement on 22.01.2020 from the driver of the vehicle carrying petitioner's goods that he was told by the petitioner to stay at Weigh Bridge in Jeedimetla and that petitioner's agent would direct the vehicle driver to deliver the goods at some places in Jeedimetla.

It is contended that when the vehicle was checked, it was stopped near a weigh bridge in IDA Jeedimetla and that the 1st respondent had not contended that the goods were unloaded there.

According to the petitioner, on flimsy grounds such as checking of the vehicle carrying goods at IDA Jeedimetla when goods are to be delivered at Secunderabad, tax and penalty cannot be levied. It is also contended that payment was made under pressure/coercion since the delivery schedule would be disturbed.

According to the petitioner, Section 129 of the Act applies only to cases where it is established that there was intention or in any case possibility of evasion of tax in respect of goods transported; even if some documents such as e-way bill is missing at the time of verification, it would at the most only create a rebuttable presumption that there was intention to evade payment of tax; and if the agent is able to establish that there was no intention evade payment of tax, then Section 129 of the Act would not be attracted.

Petitioner alleges that truck was in transit to its destination carrying all the required documents such as tax invoice and e-way bill and 1st respondent could not establish any intention on the part of the petitioner to evade payment of tax.

Held by High Court

In the instant case, one of the grounds for detention in Form GST MOV-06 is that 'the documents which were tendered are found to be defective'. But (i) which document is defective (whether it is e-way bill or the tax invoice/bill and supply/delivery challan) and (ii) why it is defective, is not mentioned.

From the very contents of the Form GST MOV-06, wherein it is alleged that the 'documents tendered are found to be defective', it is clear that the documents available with the driver were actually tendered to the 1st respondent. They clearly showed that the goods were to be delivered at Secunderabad. Therefore as mentioned in the Circular dt. 13.4.2018, the vehicle should be allowed to proceed further and the movement of goods cannot be stopped prima-facie.

The explanation offered by the petitioner in reply dt. 23-01-2020 to the notice in Form GST MOV-06 dt. 22-01-2020 that generally material from Salem, Tamil Nadu purchased by various dealers at Hyderabad which is to be delivered at Hyderabad at various destinations do come in groups and assemble at IDA Jeedimetla; that the vehicles through Outer Ring Road reach Jeedimetla as there is no entry for heavy vehicle into the city through main roads; and the person in charge from SAIL (TN) reaches IDA Jeedimetla and directs the vehicle drivers to the respective delivery points, cannot be said to be unbelievable. The fact that the said explanations have not even considered by the 1st respondent is also glaring.

When the petitioner denies that the driver of the vehicle carrying the goods did not understand Hindi, no reliance can be placed on the statement of the driver of the vehicle noted on 22.1.2020 that goods were to be delivered at IDA Jeedimetla.

It is not the case of the 1st respondent that mere checking of a vehicle or it being found at a different place without anything more, is by itself a 'taxable event' under the CGST Act/Telangana GST Act, 2017. So, in our opinion, under these Acts, it is not permissible to detain a vehicle carrying goods or levy penalty on the sole ground that the vehicle is found at a wrong destination without anything more. Admittedly, the vehicle was found at weigh bridge, IDA Jeedimetla and it is not the case of the 1st respondent that at the time of it's detention or check at that location, there was sale of goods being done without paying applicable tax. In fact there is no material placed on record by 1st respondent to show that any attempt was being made by petitioner to sell the goods in local market at IDA Jeedimetla on 22.1.2020 evading CGST and SGST.

We are of the opinion that the reasons given for detaining the goods and the vehicle they were being carried in do not indicate any violation of the provisions of the Act by petitioner warranting levy of tax and penalty on the petitioner under the Act.

In Dabur India Ltd. Vs. State of Uttar Pradesh (1990) 4 SCC 113 the Supreme Court observed that a litigant cannot be coerced by the Government to make payment of duties which the litigant is contending not to be leviable. The Supreme Court held that though the State is entitled to enforce payment and to take all legal steps, it cannot be permitted to play dirty games with the citizens to coerce them in making payments when the citizens were not obliged to make them. It also observed that if any money is due to the Government, it should not take extralegal steps to recover it.

We are of the opinion that the detention of the vehicle at IDA Jeedimetla in spite of the vehicle carrying tax invoice and the e-way bill is in violation of the provisions of the Act, in particular Rule 68 of the Rules framed under the Act and the Circulars dt. 13.4.2018 and 14.9.2018 of the Central Board of Indirect Taxes and Customs which are binding on the 1st respondent and that the 1st respondent was not justified in collecting tax and penalty from the petitioner.

Also it is not in dispute that petitioner waited for two days after submitting explanation to the show-cause notice for an order to be passed by the 1st respondent, and when the 1st respondent failed to do so and also did not release the vehicle and the goods, the petitioner paid the tax and penalty under protest on 25.01.2020 and got released the goods. So there was no voluntary payment of tax and penalty by petitioner for the 1st respondent to plead any estoppel against the petitioner.

Accordingly, the Writ Petition is allowed; the action of the 1st respondent in detaining the vehicle carrying the goods purchased by petitioner on 22-01-2020 and forcing the petitioner to pay on 25-1-2020 a sum of ₹ 9,40,618/- towards tax and penalty is declared as illegal, arbitrary and violative of Article 14 and 265 of the Constitution of India apart from Article 301 of the Constitution of India and also the provisions of the Act and Rules made thereunder. Accordingly, the 1st respondent is directed to refund the above amount within six (06) weeks together with interest @ 7% p.a. from 25.01.2020 till date of payment. No costs.

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