Decision given by High Court of Rajasthan in case of H.R. Enterprises v. State of Rajasthan, Jaipur
Following Principle emerged from the decision
When all the documents such as Invoice, e-way bill, weigh slip are found to be correct then whether goods can be detained to verify genuineness of the transaction or to assess the eligibility of Input tax credit?
No – It has been held by High Court of Rajasthan in case of H.R. Enterprises v. State of Rajasthan, Jaipur that the incident or occasion of availing input tax credit is an event preceding the transaction in question and completely divorced from the movement/transit in question. Once the goods in question are in conformity with the documents of transit, the scope of inquiry under section 68 of the Act of 2017 by Anti Evasion Officer/Check Post Officer or flying squad ends. He cannot kick start an inquiry relating to the genuineness of purchase and corresponding input tax credit, which essentially relates to purchase of goods
Whether the Officer can directly charge penalty to the extent of 50% of the value of goods without proposing penalty under section 129(1)(a) of CGST Act, 2017 i.e. penalty equal to the amount of tax?
No – It has been held by High Court of Rajasthan in case of H.R. Enterprises v. State of Rajasthan, Jaipur that – A perusal of the said notice issued in MOV-07 shows that the officer has jumped to propose penalty under clause (b) of section 129(1)(a) on the pretext that no-one has appeared for the owner of goods and proposed penalty as high as 50% of the value of goods. As against this, he was firstly required to propose penalty under clause (a) of section 129(1), which would have been equal to the amount of tax. Given that the penalty under clause (a) would have been Rs. 1,93,460/-and proposed penalty under clause (b) is Rs. 10,74,780/-, in the opinion of this Court, the statutory remedies will be inefficacious. Even, remedy relating to release of goods under section 129(1)(c) of the Act of 2017 would be illusory.
|Appeal||H R Enterprise (the Petitioner) filed writ Petition before High Court of Rajasthanon account goods detained “to verify genuineness of the transaction”|
|Facts of Case||1.The petitioners submits that consignment in question which was beingtransported was having all requisite/prescribed documents while in transit. 2.When the Officer intercepted the goods, all the documents prescribed underlaw, such as Tax Invoice; E-Way Bill, Weigh Slip; were furnished, yet he did not allow the petitioner to move.3.The requisite documents were produced before the Officer. However, theofficer firstly directed the petitioner to remain stationed with the vehicle and goods loaded therein for the purpose of physical verification. He issued notice in MOV-2 and, thereafter, got extension to complete inspection from the competent authority, simply with a view to conduct inquiry relating to allegedwrongful availment of input tax credit.|
|Reason for which goods were detained by the Department & Reply submitted by the Tax Payer to the Officer||The conveyance was intercepted to verify the genuineness of the transaction|
|Contention of the Tax Payer||
|Contention of the Department||
|Principle Laid down by High Court||
Note : – It is mentioned that this Court finds that neither the jurisdiction of the respondent – authority nor the question relating to scope of powers of the empowered officer while goods in transit was brought for consideration of the Court. In such scenario, if the flying squad or check post other than appropriate officer is conducting such enquiries. Then the same will be out of purview of the GST Provisions. However, since the matter was not in the question, partial relief was granted to tax payer. Further it has been noted by court that upon perusal of the record and reply, recorded a categorical finding of evasion of tax and discrepancy in the documents, whereas, such is not the position, when it comes to the case in hands. In such scenario the proceeding which are being conducted by the authority was required to be conducted. However, the court intervened by passing the interim orders for release of goods.