[2024] 159 taxmann.

com 192 (Calcutta)[01-02-2024]

GST : Detention order and imposing penalty at rate 200 % for a non-taxable
movement of JCB machine that was returning from work was not in accordance with
as law as assessee, owner of said machine, did not had intention to evade tax,
therefore said order of detention was to be set aside

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[2024] 159 taxmann.com 192 (Calcutta)

HIGH COURT OF CALCUTTA
Mohammad Shamasher
v.
State of West Bengal
AMRITA SINHA, J.
W.P.A. NO. 85 OF 2024
FEBRUARY 1, 2024

Detention of goods (JCB Machine) - Documents Not available - A escalator machine(JCB) of

assessee returning from work was intercepted and driver failed to produce documents in
support of movement of JCB machine - Detention order under section 129 (1) was issued
and penalty at rate of 200% was imposed HELD : It was a Non-taxable movement of goods as
machine was returning after completion of work - Despite non-taxable nature, revenue
imposed a penalty due to lack of valid documents supporting goods' movement - Every
detention may not invariably be proceeded under Section 129, if fraudulent intent is not
found, section 129 may not be invoked - Though possession of all document in support of
transportation is fundamental requirement of law, assessee did not have intention to evade
tax, accordingly, imposition of penalty at rate of 200% of tax payable appears to be highly
disproportionate and not in accordance with provisions of law - Therefore said order of
detention under section 129(1) was to be set aside [Section 129 of Central Goods And
Services Tax Act, 2017/ West Bengal Goods And Services Tax Act, 2017][Paras 20 to 24][In
favour of assessee]
Dhiraj Lakhotia and Ms. Khushi Kundu, Advs. for the Petitioner. Momenur Rahman and Ms. Rima
Sarkar, Advs. for the Respondent.
JUDGMENT

Amrita Sinha, J. - The petitioner is the sole proprietor of M/s Afika Infrastructure. He is registered under the
Central Goods and Services Tax Act, 2017. An escalator machine (JCB) of the petitioner returning from work
was intercepted by the officers of the Bureau of Investigation, North Bengal Alipurduar Zone. The driver of
the vehicle failed to produce any document in support of movement of the goods, i.e, the JCB machine. On
account of the said offence order of detention under section 129 (1) of the State Goods and Services Tax Act,
2017 was issued. The authority alleged that the provision of Section 68 (1) of the Act was violated. The
petitioner was directed to pay penalty under section 129 (3) of the Act.
2. The adjudicating authority passed order against the petitioner. An appeal was carried there from before the
appellate forum which too stood rejected. The petitioner has been held liable for payment of penalty of a sum
of Rs. 9,93,008/- for contravention of the provision of the Act and the Rules made thereunder. The petitioner
has executed a bank guarantee for the above sum subject to which the JCB machine has been released
provisionally.
3. Specific case of the petitioner is that under the provision of Section 129 (3) of the Act, the respondent
authority does not have the power to evaluate and adjudicate the quantum of tax.
4. The petitioner submits that the machine in question was being transported with a valid e-way bill. The
details of the machine were mentioned in the said e-way bill. The invoice number and the reason for
transportation was also mentioned. The petitioner contends that no tax is payable on account of the return of
the machine after completion of work. The relevant details of the movement of the goods were duly submitted
before the adjudicating authority but without appreciating the applicability of Section 129 (3) of the Act, the
adjudicating and the appellate authority demanded penalty which is liable to be set aside.
5. It has been contended that the proper officer exceeded his jurisdiction in calculating the quantum of tax and
specifying penalty at the rate of 200% of the tax payable on such goods. The proper officer does not have the
power either to determine or to specify tax under section 129 of the Act. Non availability of the delivery
challan with the vehicle is a mere procedural impropriety and the petitioner did not have any intention to
evade tax. The petitioner is the owner of the JCB machine which was being returned and the same is not a
taxable supply. Assuming, but not admitting, that penalty could have been charged, the same ought not to be
more than Rs. 25,000/-only as the goods in question was not eligible for payment of tax. For a minor breach
of not possessing the delivery challan, such heavy amount of penalty at the rate of 200% ought not to have
been imposed.
6. In support of the aforesaid submission the petitioner relies upon the judgment delivered by the High Court
of Uttarakhand in Prestress Steel LLP v. Commissioner, Uttarakhand State GST reported in (2013) 157
taxmann.com112 (Uttarakhand), order dated 16th June, 2023 passed by the Hon'ble Division of this Court in
MAT 1032/2023 IA No. CAN 1/23 and CAN 2/23; Usha Martin Limited & Anr. v. The Deputy Commissioner
of State Tax, Durgapur Range and Ors., judgment delivered by the High Court of Allahabad in the matter of
Bharti Airtel Limited v. State of Uttar Pradesh & Ors. reported in (2023) 109 GSTR 214, judgment passed by
the Hon'ble Division Bench of this Court in K.D. Gupta & Company & Anr. v. Assistant Commissioner of
State Tax, Barrackpore Range & Ors. reported in (2023) 108 GSTR 395.
7. Reliance has also been placed on the Circular no. 64/38/2018-GST dated 14th September, 2018 issued by
the Central Board of Indirect Taxes and Customs, GST Policy Wing relating to modification of the procedure
for interception of conveyances for inspection of goods in movement and detention, release and confiscation
of goods and conveyances.
8. The petitioner prays for setting aside of the order passed by the appellate authority rejecting the appeal
preferred by the petitioner and affirming the order of demand of penalty passed by the adjudicating authority.
9. The State respondents oppose the prayer of the petitioner. It has been submitted that no document in
support of the movement of the vehicle could be produced by the driver at the time of interception. The same
is in violation of Rules 138 and 138A of the CGST Rules, 2017. Rule 55 of CGST Rules requires the invoice,
delivery challan with proper signature for movement of the goods.
10. The adjudicating authority and the appellate authority noticed that the vehicle in question was not released
by the person as recorded in the e-way bill. The same was released by some other person. The delivery challan
was also not signed by the consignor. Section 129 of the Act provides for imposition of 200% penalty if goods
are transported without valid documents. The adjudicating and the appellate authority were of the considered
opinion that the petitioner would be liable to pay penalty at the rate of 200%.
11. The respondents rely on the judgment delivered by the Hon'ble Supreme Court in the matter of Vardan
Associates Private Limited v. Assistant commissioner of State Tax and Central Section & Ors. reported in
2023 SCC Online SC 1710.
12. Prayer has been made for dismissal of the writ petition.
13. I have heard and considered the submissions made on behalf of both the parties.
14. From the documents annexed to the writ petition it appears that an e-way bill was duly generated for
transportation of the subject machine. As no document in support of such transportation could be produced by
the driver of the vehicle at the time interception, accordingly, the vehicle along with the machine was
detained. After physical verification of the goods it was detected that the document relied upon by the driver
was not signed. The details mentioned in the e-way bill did not match the delivery challan. The name and
address of the person who released the goods did not match with the details of the person whose name is
mentioned in the e-way bill. Because of the discrepancy in the documents, the respondent authorities
concluded that the petitioner transported the goods, i.e., the machine in contravention of the provisions of law.
15. The petitioner all along contended that he was the owner of the machine and the same was returning back
after completion of work. The reason for transportation of machine is a non taxable one. No tax is liable to be
paid as the movement was not a taxable supply. The respondent authorities noted that the reason for
transportation of the goods was inward job work return. The adjudicating authority and the appellate authority
despite noticing the fact that the supply was non-taxable, proceeded to impose penalty on the ground that the
petitioner could not produce valid documents in support of the movement of the goods.
16. The appellate authority held that the fact that the movement of goods was in pursuance of a transaction
that is not taxable is irrelevant and inconsequential because it is the mandate of law that there should be a
delivery challan accompanying the goods in movement. If condition under the Act and the Rules are not
complied, Section 129 will be attracted. Failure to comply a provision and the excuses taken for non
compliance will not exonerate the petitioner from facing action under section 129 of the Act.
17. The Hon'ble Division Bench of this Court in the matter of Usha Martin Limited (supra) held that if the
conduct of the assessee is not to evade tax then relief ought to be granted. The Hon'ble Division Bench relied
upon several decisions in similar matters and being convinced that the assessee did not have any intention to
evade tax granted relief to the petitioner.
18. In K.D. Gupta and Company (supra) the Hon'ble Division Bench held that as the assessee contended that
the transaction did not attract any levy of tax, accordingly, the adjudicating and the appellate authority both
ought to have examined the said contention while imposing penalty under section 129 of the Act.
19. In Prestress Steel (supra) it was held that even if the assessee did not carry any delivery challan there was
no additional information that could have been provided by virtue of production of delivery challan. E-way
bill was generated and tax paid. Mere non compliance of Rule 55 (5) (b) of the Act was detected. In such case
the offence may be punishable under section 122 of the Act instead of Section 129. Every detention may not
invariably be proceeded under section 129 of the Act. The Revenue may also proceed under other provisions
of the Act. If fraudulent intent is not found, Section 129 may not be invoked.
20. In Bharti Airtel (supra) the Court opined that there is no provision under section 129 for determination of
tax due, which can be done only by taking recourse to provision of Section 73 and 74 of the Act, as the case
may be. In Vardan Associates (supra), decision relied upon by the respondent authorities, penalty was
imposed as the assessee failed to comply with the requirement to generate fresh e-way bill while transporting
the goods as the e-way bill in question expired in the midst of transportation. In such a situation the Court was
of the opinion that a fresh e-way bill ought to have been generated so that the transportation of the
consignment could be concluded.
21. In the present case there was a valid e-way bill in support of the transportation. It is only because of non
production of the delivery challan that the penalty has been assessed and imposed. Though possession of all
document in support of transportation is the fundamental requirement of law, but as it appears that, the
petitioner did not have the intention to evade tax, accordingly, imposition of penalty at the rate of 200% of the
tax payable appears to be highly disproportionate and not in accordance with the provisions of law.
22. In view of the above, the impugned order passed by the adjudicating authority affirmed by the appellate
authority is liable to be set aside and is accordingly set aside. The adjudicating authority is directed to revisit
the issue in line with the discussions made herein above and pass a reasoned order. A decision shall be taken
at the earliest but positively within a period of eight weeks from the date of communication of this order.
23. The writ petition stands disposed of.
24. Urgent certified photocopy of this judgment, if applied for, be supplied to the parties or their advocates on
record expeditiously on compliance of usual legal formalities.
Later:
25. It has come to the notice of the Court that in the order dated January 30, 2024 it was wrongly recorded that
the matter will appear in the list on March 1, 2023.
26. The date should be corrected.
27. The correct date should be read as "February 1, 2024."
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