Decision given by Supreme Court of India in case of The Assistant Commissioner of State Tax & Others V/s M/s Commercial Steel Limited dated 03-09-2021 – Section 107 and Section 129 of CGST Act, 2017
|Appeal||Civil Petition filed by the Department (The Appellant) – The decision of High Court
of Telangana dated 04th March 2020 was challenged by the Department
|Facts of Case||The respondent is a proprietary concern engaged in the business of iron and steel.
The respondent purchased certain goods from a dealer, JSW Steel Limited, Vidyanagar, Karnataka, under a tax invoice dated 11 December 2019. While the conveyance was proceeding from the State of Karnataka, it was intercepted on 12 December 2019 at Jeedimetala. The tax invoice indicated that the goods were earmarked for delivery at Balanagar, Telangana. The purchase value of the goods appeared to be in the amount of Rs 11,14,579 from the tax invoices.
which goods were detained by the Department
|The case of the appellants is that Balanagar is situated between the State of
Karnataka and Jeedimetala and that no reasonable person would cross Balanagar and then turn around to go back to the place of destination. Therefore, goods were detained alleging “wrong destination”. The case of the revenue was that in the guise of an inter-State sale, the respondent was attempting to sell the goods in the local market by evading SGST and CGST.
the Tax Payer
|The consignment was covered by all the requisite documents. It is alleged that when
the goods were in transit in an inter-State sale, the respondents cannot detain the same and demand and collect the tax in the manner they have done which is arbitrary and without jurisdiction.
down by High Court
|There is no material placed on record by the Department to show that any attempt
was made by the petitioner to deliver the goods at a different place and sell in the local market evading CGST and SGST, because it was found at Jeedimetla. When the vehicle is being driven from Karnataka by a local driver of Karnataka it is perfectly possible for the driver to lose his way on account of being unfamiliar with the roads in the city of Hyderabad and bypassing Balanagar and going to Jeedimetla. Or else he may have entered the City by a Ring Road from the direction of Jeedimetla to go towards Balangar, his destination. So the fact that the vehicle was found at Jeedimetla does not automatically lead to any presumption that there was an intention on the part of the petitioner to sell the goods at the local market evading the CGST and SGST. The case was decided in favor Tax payer.
Placed by the Department before Supreme Court
|By way of civil Petition filed by the Department before Supreme Court, it was
contended by the department that the High Court ought not to have entertained the writ petition. The respondent had a statutory remedy under section 107. Instead of availing of the remedy, the respondent instituted a petition under Article
226. The existence of an alternate remedy is not an absolute bar to the Maintainability of a writ petition under Article 226 of the Constitution. But a writ petition can be entertained in exceptional circumstances where there is:
(i) a breach of fundamental rights;
(ii) a violation of the principles of natural justice;
(iii) excess of jurisdiction; or
(iv) a challenge to the vires of the statute or delegated legislation.
It was further contended that the respondent (tax payer) had alternate remedy to go through the Process of filing appeal. However, tax payer preferred writ petition before High Court and therefore, High Court ought not to have entertained the writ petition.
|Principal laid by Supreme Court||In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the
person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the Respondent.
Note : – Although the taxpayer did not violate the Provisions Prescribed in the Act at the time of Preparation of Invoice or e-way bill, yet just on account of wrong route the tax payer has to go through the litigation Process starting from 12th December 2019 to 03rd September 2021. In fact, the tax payer is a scape goat between the tax distribution of Center and State Tax Department, the goods were detained considering the fact that there was evasion of CGST & SGST. However, the tax payer would have already charged IGST on the invoice generated followed by e-way bill. Further, in case of detention of goods, many writ petition is being filled before High Court and such Writ is being entertained by the High Court. The Process of filing the writ with High Court generally expedite the Process of Justice. Even if the Tax payer would avail the alternate remedy the Principal laid down by High Court for granting Justice to the tax payer will still follow. As it is rightly said that Justice Hurried is Justice buried and Justice delayed is Justice denied – unless the Proper mechanism of this aspect in GST is streamlined the tax payer will remain a Scape Goat because of the limitation of Law.
However, considering the decision given by Supreme Court on 03-09-2021 in case of The Assistant Commissioner of State Tax V. M/s Commercial Steel Limited the GST department may prefer an appeal against the said decision of High Court.
Following Principle Emerged from the aforesaid decision given by Supreme Court: –
- Can High Court entertain Writ Petition when the tax payer has alternate remedy in the Act under Section 107 of the CGST Act, 2017?
Decision : – No – The High Court cannot entertain Writ Petition except under exceptional circumstances where there is:
- a breach of fundamental rights;
- a violation of the principles of natural justice;
- excess of jurisdiction; or
- a challenge to the vires of the statute or delegated legislation.
- Whether the Department can detain the goods if wrong route is taken by driver during the movement of goods?
Decision : – Unless, there is material on record placed by the Department to prove that there was intention of evading the payment of tax by taking wrong route or as per the factual matrix of the case it can be proven that the wrong route was taken to evade the payment of tax, then, the goods can be detained by the Department and proceeding can be conducted under Section 129 or 130 of CGST Act, 2017.