GST law had
promised to usher in a host of reforms on hastle free movement goods across the
country. Some of the promising features of GST involved abolition of
check-posts, common way bill management systems, uniformity in law enforcement
across the country thus boosting business efficiency in logistics. This has certainly
freed business enterprises from shackles of traditional law enforcement and is
on course to digitization of enforcement to improve the administrative
effectiveness and minimise hurdles to trade and commerce.
In-transit
inspection plays a critical role in law enforcement. Interception, detention
and seizure provisions of the GST law perform the function of administrating
law on a real-time basis to check tax evasion during movement of goods. Section
68 of Chapter XIV contains enforcement provisions and grants wide powers to the
tax administration. Active tax enforcement not only detects tax evasion but
also acts as a deterrent. This article is an attempt to elaborate provisions in
detail and identify the critical areas one needs to address in such matters.
GENERAL UNDERSTANDING OF INTERCEPTION, DETENTION & SEIZURE
‘Interception’ is generally understood as the act of preventing someone or
something from continuing to a destination. Black’s Law dictionary states: “the
term usually refers to covert reception by a law enforcement agency” and P
Ramanatha Iyer’s Law Lexicon states interception as “seize, catch or
stop (letter etc.) in transmit”.
‘Detention’ is understood as the act of taking custody over someone or
something. Black’s law dictionary states “the act or an instance of holding a
person in custody; confinement or compulsory delay”; Law Lexicon states
“the action of detaining, the keeping in confinement or custody, a keeping from
going on or proceeding”.
‘Seizure’ is understood as the act of capturing or confiscating something by
force (i.e. against the will of the person having possession). Black’s Law
states “the act or an instance of taking possession of a person or property by
legal right or process, esp, in constitutional law, a confiscation or arrest
that may interfere with a person’s reasonable expectation of privacy; Law
Lexicon explains seizure as taking possession of property by an officer
under legal process.
‘Confiscation’ means permanent deprivation of property by order of a court of
competent authority (Law Lexicon). Black’s Law states “seizure of
property for the public treasury”.
One would observe
from the ensuing paragraphs, that each term represents a different stage in a
proceeding and the rigours increase as the stage progresses. For eg.
Interception requires a simple reporting and release of goods but as soon the
goods are proposed for detention and seizure, the intensity of the powers of
the officer increasing. Same goes with once the goods enter confiscation
proceedings, the power of the officers over the goods are more stringent than
in cases of detention. Rights and obligations of the officer and the tax payer
are different at each level of the proceeding and hence one needs to be mindful
of the stage of the proceedings while addressing the questions of the officer.
IN-TRANSIT DOCUMENTATION U/S. 68(1) R/W RULE 138A
Section 68 provides
for carrying specified documents/ devices along with the conveyance of
consignment during the transportation of goods. The section empowers the
‘proper officer’ to intercept the conveyance at any place and require
the ‘person in charge’ of the conveyance to produce the prescribed
documents/devices for verification and allow inspection of goods. The term
proper officer has been defined to mean the officer who has been assigned the
powers of interception by the respective Commissioners of the CGST/SGST. While
determining the proper officer care should be taken that the said officer has
territorial and functional jurisdiction at the point of interception. ‘Person
in charge’ of conveyance has not been defined and should be understood as
referring to the transporter and driver of the conveyance performing the
movement of goods.
Rule 138A (inserted
w.e.f. 30-08-2017) provides for the requirement of carrying a tax invoice, bill
of supply, bill of entry or delivery challan and e-way bill (as applicable). In
terms of section 138A(5), the Commissioner in special cases is permitted to
waive the requirement of e-way bill. The contents of a tax invoice, bill of
supply, delivery challan and e-way bill are prescribed in Rule 46, 46A and 49.
In addition to the said manual documents, e-way bill requirements as generated
from the common portal were mandated vide Notification 27/2017-CT dt.
30.08.2017 w.e.f. from 01/02/2018 but ultimately implemented from 01-04-2018.
Certain States (like Karnataka) implemented these provisions even prior to the
Centre invoking the E-way bill provisions for intra-state transactions.
INTERCEPTING POWERS U/S. 68(2) R/W RULE 138 B
Section 68(2) r/w
Rule 138B grants the powers to the Commissioner or proper officer to intercept
any conveyance for verification of the e-way bill for all inter-state and
intra-state movement. Physical verification of the intercepted vehicle should
be carried out only by empowered officers. In terms of CBIC Circular
3/3/2017-GST dt. 05.07.2017, the Inspector of Central Tax and his superiors
have been granted powers of interception. The proviso of the said rule states
that in case of receipt of any specific information of tax evasion, physical
verification of the conveyance can be carried out by any other officer after
obtaining necessary approval from the Commissioner.
INSPECTING POWERS U/S. 68(2) R/W RILE 138 C
Section 68(2) r/w
Rule 138C requires that every inspection of goods in transit would have to be
recorded online by the proper officer within 24 hours of inspection and the
final report recorded within 3 days of inspection (in Form EWB-03). Sub rule
(2) states that where any physical verification of goods has been performed
during transit in one State or in any other State, no further physical
verification of the said conveyance should be carried out again in the State
unless specific information of evasion is available with the officer
subsequently. Rule 138D specifies that the detention of the vehicle for the
purpose of inspection should not exceed 30 minutes and the transporter can
upload the details in cases where the detention is beyond 30 minutes.
DETENTION & SEIZURE POWERS U/S.129
The proper officer
is empowered to detain the conveyance and the goods during its transit in case
of any contravention of the provisions of the Act (report of detention in Form
EWB-04). The detention proceedings require issuance of a notice, seeking a
reply and concluding the proceeding by way of a detention/seizure order. In
terms of the CBIC Circular dt 05.07.2017 (supra) detention powers can be
exercised only by the Asst/Dy. Commissioner of Central Tax. The goods would be
released by the proper officer only on payment of the applicable tax and
penalty or submission of a security in prescribed form.
The said section
also prescribes the procedure to be adopted on detention of the goods in
transit. In this regard, CBIC has issued circulars (Circular 41/15/2018-GST dt.
13-04-2018; No 49/23/2018-GST dt. 21-06-2018 and No 64/38/2018-GST dt.
14-09-2018) which specify the detailed procedure and forms to the followed
(MOV-01 to MOV-11) by the Central Tax officers in matters of interception,
inspection and detention. Key points emerging from the Circular are as follows:
- The jurisdictional
Commissioner or the designated proper officer is permitted to conduct
interception and inspection of conveyances within the jurisdictional area
specified by the Commissioner. One should verify whether the locational
Commissionerate of the region has issued any such trade notice assigning
functional/ geographical jurisdiction.
- The proper officer believes
that the movement of goods is with an intention of evading tax, he may directly
invoke section 130 where a fine in lieu of compensation may be imposed.
- Where an order is passed
under the CGST Act, a corresponding order shall also be passed under the
respective State laws as well.
- Demand of the tax, penalty,
fine or other charges would be uploaded on the electronic liability register
and in case of unregistered persons a temporary ID would be created for
discharge of the liability posted on the common portal.
- In cases of multiple
consignments, only goods or conveyance in respect of which there is violation
of the provisions of the Act should be detained while the rest of the
consignment should be permitted to be released by the proper officer.
- Consignment of goods should
not be detained where there are clerical errors such as spelling mistakes in
name of consignor/ee, PIN code, locality, document number of e-way bill,
vehicle number, etc. in cases of clerical errors, a maximum penalty of Rs. 500
each under respective law could be imposed.
- Section 129 does not
mandate payment of tax in all cases and the owner of goods scan exercise the
option of furnishing a security (in prescribed form and a bond supported by a
bank guarantee equal to amount payable).
CONFISCATION POWERS U/S.130
In cases where the
proper officer has formed the view that any of the five circumstances exists,
the goods are liable for confiscation – where any person:
i. Supplies or receives goods in contravention
of the provisions of Act/ rules with intention of tax evasion
ii. Does not account for goods liable for paying
tax
iii. Supplies goods without obtaining a
registration number
iv. Contravenes any provision of the Act with
intention of tax evasion
v. Uses any conveyance as means of transport for
tax evasion unless the owner of the conveyance has no knowledge of this action
The fine legal
difference between detention and confiscation is that detention is invoked only
on suspicion over tax evasion whereas confiscation require reasons beyond doubt
that the goods are a result of tax evasion [Kerala High Court in Indus
Towers vs. Asst. State Tax officer 2018 (1) TMI 1313]
In terms of the
CBIC Circular dt 05.07.2017 (supra) confiscation powers can be exercised only
by the Asst/Dy Commissioner of Central Tax. In cases of confiscation, the title
over the goods shall vest upon the Government and the owner of the goods cannot
exercise any rights over the goods. Whenever any confiscation of goods is
ordered, the owner of the goods has the option to pay a fine in lieu of
confiscation which shall not exceed the market value of goods confiscated less
the tax chargeable thereon, and shall in no case be less than the amount
specified u/s. 129. In cases of confiscation of the conveyance itself, the fine
shall not exceed the tax payable on the goods under conveyance.
APPROPRIATE TAX ADMINISTRATION
Though GST has been
built on a national platform, legislative powers under IGST, CGST and SGST Act
have certain inherent geographical limitations. In addition to that, the Centre
and State have notified the respective workforce for administration. It would
be thus important to identify the ‘proper officer’ having geographical
jurisdiction over goods under transit.
We can take an
example of a case where goods under inter-state movement from Kerala (KL) to
Delhi (DL) are intercepted by a State officer in Maharashtra (MH) and detained
for lack of proper documentation. Whether the intercepting officer in MH could
be considered as the ‘proper officer’ for interception, detention, seizure,
inspection and adjudication of the goods under movement which is an inter-state
supply from KL to DL? The practical experience thus far is that the State
officers detain the goods and direct the assessee to open a temporary ID in
their State and discharge the taxes as if it is an intra-state sale within MH.
Primarily, three
theories can exist (A) Only Origin State authorities have jurisdiction over
interception; or (B) All state authorities (including origin and destination
state) have jurisdiction over the goods under transit as long as the goods are
physically present in their state boundaries during exercise of powers or (C)
While state authorities have powers of interception, the final assessment of
the tax involved would be made by the officer in the State of origin based on
the detention report.
A) Geographical
jurisdiction
Article 246A(1)
empower both the Centre and State to make laws pertaining to goods and service
tax imposed by the Union or State. 246A(2) grants exclusive powers to Centre to
legislate on matters of inter-state trade of commerce. Article 286 places a
clear embargo on the State to impose a tax on supply of goods or services ‘outside
a State’ and or ‘in course of import or export of goods or services’.
Article 258 provides for the Union to confer powers to the State or its
officers either conditionally or unconditionally, with consent of the President
of India and the Governor of the respective State, in relation to any matter to
which the Executive of the Union extends. Where such powers have been conferred
by the Union to the State, administration costs attributable to the staff
empowered would be payable by the Centre to State. The IGST has not invoked
Article 258 but empowered the State workforce through statutory provisions.
In terms of Article
286(2), the Centre has been placed with the responsibility to formulate the
principles of determining where the supply takes place. It is in exercise of
these powers that the IGST Act has formulated provisions for ascertaining the
character of supply (i.e. intra-state vs. inter-state) based on the place of
supply of such services: Chapter IV and V of the IGST Act read together answer
(a) the characterisation of the supply (inter-state or intra-state); and (b)
where locus of the supply. This is broadly akin to the provisions of section 3,
4 and 5 of the Central Sales Tax Act, 1956 (CST law).
In the context of
administration, the GST council has decided that Centre & State’s
administration would be a unified force. Discussions on cross empowerment in
GST council involved five options which were discussed at length and the fifth
option attained consensus only in the 9th GST Council meeting (para
28 of minutes of meeting). The key thrust of the decisions where (a) Unified
tax payer and administration interface;(b) Allocation of tax payer base between
the Centre and State based on statistical data for administering the CGST/SGST
Acts (b) Concurrent enforcement powers to Centre & State on entire value
chain based on intelligence inputs of respective field formations; (c) Powers
under IGST law to be cross empowered on the same basis as that of CGST/ SGST
Act. However, Centre has exclusive powers to administer issues around ‘place of
supply’, ‘export’, ‘imports’ etc. These decisions were translated into the CGST
and SGST Act as follows:
- Section 6 of CGST/ SGST
cross empowers the corresponding officer as per the allocation criteria agreed
at the GST Council (stated above). Further, it has been agreed that where an officer
has initiated any proceeding on a subject matter under an Act, no proceeding
shall be initiated by the officer of the corresponding administration on the
same subject. This ensured that unified interface was maintained.
- In respect of the IGST Act,
section 20 does not borrow the cross-empowerment provisions of the CGST Act.
The IGST Act has a different mechanism of empowerment of both Central/ State
officers. Section 3 grants powers to central tax officers for exercise of all
powers of the Act. The CBIC has issued Circulars No. 3/3/2017dt 05.07.2017
assigning powers to the Central Tax Officers. Section 4 also authorises
officers appointed under the State GST Acts as proper officers under the IGST
Act subject to exceptions and conditions of the GST Council.
- The Commissioner of the
State would have thus issued appropriate notifications under their respective
State laws assigning the jurisdiction of enforcement action to the officers and
by virtue of the said notification, they would acquire enforcement jurisdiction
even under the IGST Act. Therefore State officers who are empowered under the
State GST to perform enforcement activity would also be empowered to perform
the enforcement function under the IGST Act.
We may recollect
that CST law empowered the ‘appropriate state’ from where the movement of goods
commenced to collect and enforce payment of tax through their general sales tax
law (Section 9). This enabled the origin state to acquire jurisdiction on
inter-state sale movement and enforcement action. Transit states acquired
enforcement jurisdiction over such inter-state movement through transit pass
and way bill provisions which setup a presumption that the goods have been sold
within the State on failure to produce such documentation. The IGST Act is on a
different footing. Firstly, States do not have the same autonomous powers akin
to section 9(2) of CST Act in matters of collection and enforcement provisions.
The IGST Act is a self-sufficient Act containing its own collection and enforcement
provisions. Secondly, IGST Act has limited itself to appointing the State
officers as proper officers for the purpose the IGST Act (section 4) rather
adopting the provisions of the respective State law. Thirdly, IGST does not
provide for any presumption as to the sale of goods within a state in the
absence of any prescriptive documentation. In other words, the character of the
transaction being an inter-state transaction does not get altered during the
process of detention and/or seizure and tax due on such transaction should be
assessed from the Origin State. Even in case there is a dispute on the
inter-state character, the Centre has exclusive domain over examining its
nature in view of Article 286(2) and the decision of the 9th GST Council meeting.
The following
overall inferences can be formed from above analysis:
- Power of legislation is
distinct from the power of administration and it is not necessary that the
power of legislation and enforcement are with the same authority (eg. CST Act).
The administrative provisions of IGST act are self-contained in the said
enactment itself.
- IGST Act only borrows the
work force of the State for implementing the Act. State work force is required
to follow the Circulars, Notifications of the CBIC / Central Tax office while
exercising their powers under the IGST Act. The statutory powers are not
sourced from the State legislation independently like section 9(2) of the CST
law (refer discussion below).
- There is no specific
notification or circular issued under the IGST Act assigning the functions and
territorial limits to the State workforce. In the absence of a specific
notification or circular one may view that (a) each state workforce would
operate within the respective State boundaries and the role assigned by the
State Commissioner (enforcement, vigilance, audit, range, etc) in that boundary
would operate equally for the IGST Act or (b) the State workforce would have
pan India powers on inter-state transactions and would exercise these powers
under IGST law in the absence of any geographical limits over the officers
under the IGST law. The former seems to be a more plausible approach to
resolving the issue on jurisdiction.
- The power of collection on
inter-state supplies from State X lies with the Centre. However, State X in
terms of Article 286 is precluded over imposing tax on supplies occurring in
all other States or in import/ export transactions. Therefore intercepting
officers in State X should refrain imposing any tax on inter-state movement u/s. 129.
Coming to the issue
taken up earlier, MH State should not be considered as the ‘proper officer’ for
the inter-state movement from KL to DL as the jurisdiction of administration is
between the Centre/ State workforce operating from the State of Kerala. An
alternative view would be that the IGST Act being a pan Indian enactment has
borrowed the State officers across India for the purpose of enforcement in
their respective geographical area. MH State may not have administrative power
over the ‘transaction of supply’ but it could have powers over the ‘goods under
movement’ for the limited purpose of interception, inspection, detention and
seizure.
Though the above
powers of interception, detention and release would be exercised by the MH
officer under the IGST Act, the final assessment of the liability on the goods
will have to take place at the Origin State (KL) either by the Central/ State
administration depending on the allocation.
FUNCTIONAL JURISDICTION
Section 2(91) defines the proper officer to mean the person who has been
assigned the function by the Commissioner. CBEC has in its Circular No.
3/3/2017-GST dt. 05-07-2017 designated the Inspector of Central Tax with powers
of interception and the Asst./Dy. Commissioner of Central Tax with the powers
of adjudication over the matter of release of goods u/s. 129. These powers
would be exercised by the respective officers within the confines of the
geography assigned to the said officers. It is expected that similar
Circulars/notifications are issued by the respective State Commissioners
assigning the functional jurisdiction to their officers. Therefore, one would
have to carefully peruse the relevant notification/ circulars under the States
for consideration to establish the function and geographical jurisdiction over
a particular transaction/goods.
OVERALL SCHEME OF SECTION 129
Some important
questions arise on the overall scheme of section 129:
Whether
proceedings u/s. 129 is interim in nature and subject to the final assessment
in the hands of
the supplier?
Section 129
provides for detention, seizure and release of goods by following a prescribed
procedure of issuance of a notice, seeking a reply and furnishing a release
order. A key feature is that it permits release of the goods on furnishing a
security in the prescribed form, indicating that the goods are being released
on a provisional basis and the assessment would be finalised subsequently. But
the provision subsequently goes on to state that on payment of the amount, all
proceedings in respect of the notice would deemed to the concluded. There seems
to be a divergence in the way the provisions are drafted. One theory suggests
that the proceedings are interim in nature and subject to its finalisation
before the assessing authority who would take cognizance of the entire
proceeding u/s. 64, 73, 74 and complete the assessment of the supplier taking
into account the report of the inspecting authority. This was the manner in
which the VAT law was also being enforced across States. The other theory
suggests that the proceedings are conclusive and no further action needs to be
taken at the assessing officer’s end on the subject matter. Now there could be
instances where the supplier would have already reported the transaction in its
GSTR-3B/GSTR-1 and discharged the applicable taxes. If the goods in transit are
subjected to the said provisions and cleared on payment of applicable tax and
penalty, it would result in a double taxation of the very same goods which
clearly does not seem to be the intent of law. It appears to the author that
the scope of section 68 r/w 129 is to examine the completeness of documents and
provide information to the assessing authority, which could be obtained only
from real time enforcement, for finalisation of the assessment and not just to
conclude the entire proceeding at the place of interception. The term
‘contravention’ in section 129 should be understood contextually on with
reference to the compliance of documentation during the movement of goods and
not beyond that. The author believes that all these proceedings would finally
culminate by way of an assessment u/s. 64, 73 or 74.
How do we
harmoniously apply the penalty imposable u/s. 129 vs. 122(1) (i), (ii), (xiv),
(xv), (xviii) vs. 122(2) : specific vs. general : lower vs. higher penalty?
Both section 129
and 122 are penal provisions imposing penalty for offences under the Act. There
is an overlap of the scope of the said sections resulting in ambiguity. The
said sections are briefly extracted below
|
Section 129
|
Section 122(1) (i), (ii), (xiv), (xv),
(xviii)
|
Section 122(2)
|
|
Penalty for contravention of goods in
transit
|
Specific Penalties for movement of goods
without invoice/ documents, evasion of tax, goods liable for confiscation,
etc
|
Penalty where tax has not been paid or
short paid
|
|
100% of tax payable (in case of exempted
goods – 2% of value of goods) (OR)
50% of value of goods less tax paid (5%
in case of exempted goods)
|
Penalty of 10,000 or 100% of tax evaded
w.e.h.
|
Penalty of Rs. 10,000 or 10% of the tax
due w.e.h.
|
The field
formations are consistently applying the provisions which results in a higher
collection without assessing the applicable section under which penalty are
imposable. While certainly section 129 is specific to cases where goods are in
transit, section 122 also provides for cases of imposition of penalty where
goods are transported without cover of documents. One possible resolution to
this conflict may be as follows:
- Section 129 is specific to
cases of non-compliance identified during transit and section 122(1)
applies only to cases where the transportation has completed and the
non-compliance is identified after the goods have reached their
destination (say the registered premises)
- Section 122(1) is narrower
in its scope in so far as it requires tax to be evaded for its application.
There could be cases where goods have reached the destination without
appropriate documents but duly accounted for in the books of accounts. In such
cases, section 129 cannot be imposed and section 122(1) would apply to cases
involving tax evasion.
- Section 122(2) on the other
hand being a general provision for penalty should not apply since section
122(1) and 129 are more specific contenders on this subject matter
PRACTICAL ISSUES ON INTERCEPTION / INSPECTION / DETENTION & SEIZURE
Apart from the
legal analysis, the trade and community are facing multiple challenges at the
ground level on matters of such matters. The issues are tabulated below for
easy reference:
|
S No
|
Issue
|
Possible resolution
|
|
1
|
E-way bill not containing key particulars such as
Invoice No., Taxable value, Tax , etc OR E-way bill not generated
|
Supreme Court in Guljag Industries (below) has
stated that mens-rea need not be examined in cases of statutory offences.
Therefore, tax & penalty can be imposed u/s 129 equivalent to the tax in
cases of such violations. Recent decision of MP High Court in Gati
Kintetsu Express Pvt ltd vs. CCT 2018 (15) GSTL 310 affirmed penalty in
case of violation and distinguished Allahabad High Court’s decision in VSL
Alloys (India) Pvt Ltd vs. State of UP 2018 (5) TMI 455.
|
|
2
|
E-way bill & Invoice is valid and containing
accurate particulars but quantity reported is higher than the physical
quantity in the conveyance (due to evaporation, wastage, water content, etc)
|
Taxable quantity/value being higher than the physical
quantity, there is no short payment of tax and hence detention would be
incorrect. At the most in case where there is an error, general penalty of
Rs. 25,000/- may be imposed for discrepancies.
|
|
3
|
E-way bill is valid and generated but invoice/ delivery
challan is not carried along with consignment – all particulars in e-way bill
match with consignment
|
Rule 138A and CBEC Circular require both the
self-generated document (invoice/delivery challan) and e-way bill to be
carried. E-way bill is a system generated document containing all particulars
of the invoice and a verifiable/non-destructible document and hence superior
in status vis-à-vis the invoice. Ideally no penalty should be imposed in such
scenarios.
|
|
4
|
E-way bill not reconciling with the some valuation
particulars of Invoice – such as Taxable Value, Tax etc but matching with
other particulars
|
Officers may disregard the e–way bill entirely and
state that conveyance is without e-way bill in which case the entire penalty
would be imposable. Alternatively, if it is established that e-way bill
relates to the very same consignment, then possibly e-way bill would be
considered for examination, ignoring the invoice and the physical
verification would be performed accordingly. Any excess stock/ value above
the e-way bill may be subject to penalty.
|
|
|
|
|
|
5 & 6
|
Delivery challan & e-way bill issued and officer contesting
that Invoice should be issued (OR) Wrong Tax Type recorded in the E-way bill
& Invoice i.e. IGST instead of CGST/SGST
|
Intercepting officer is only required to assess with
the prescribed documents are being carried and they reconcile with the physical
movment of goods. Any dispute on the type of documentation, etc., is not with
the domain of intercepting officer and is for the assesing authority to
examine and take a legal position on that front.
|
|
7
|
Goods sent on approval and at particular location for
sale within the six months time limit but e-way has expired
|
This is a tricky issue. Whether goods sent on approval
and retained by the recipient for approval for six months are required to be
under a live e-way bill. While one may say that this is incorrect another
argument would be that goods should be either under a live e-way bill or at
the registered presmises of the supplier and hence registration should be
obtained for places where goods are temporarily stored.
|
|
8
|
Alternative/ Wrong route adopted by the transporter but
e-way bill valid
|
Not a contravention of any provision and section 129
cannot be invoked unless the officer is establish tax evasion.
|
|
9
|
Difference between invoice date : e-way bill date
(could range from few months to year) especially in case of goods consigned
after auction
|
Inspecting officers are intercepting goods where
invoice is significantly prior to e-way bill. Section 31 permits invoice to
be raised on or before removal of goods. A tax invoice is a permanent
document & does not have any expiry date unlike e-way bill which has is a
temporary document. Therefore, such action is incorrect in law.
|
|
10
|
Owner of goods – Ex-works/ FOB contracts, etc.
|
Section 129 requires the owner to come forward for the
entire proceedings. There have been cases where the officer has rejected the
purchaser from hearing the matter. There have been cases where the officer
has called upon the purchaser rather than the seller since the purchaser
resides in the same State. This is a challenge since ownership is differently
understood from the term supplier and recipient.
|
|
11
|
Whether inspecting officer can question the veracity of
the delivery address (eg. Delivery at a fourth location not belonging to the
customer)
|
Section 129 is invoked only where there is a
contravention of provisions during movement of goods. Being tax paid goods,
there is nothing which is further payable irrespective of the destination of
goods. Unless there is specific information of tax evasion, the officer
cannot question the veracity of the delivery address.
|
|
12
|
Multiple consignment – detain only goods in respect of
violation : multiple invoice vs. multiple quantity
|
CBIC circular (supra) states that in case of multiple
consignments, detention proceedings should be applied only on the consignment
under which there is a violation. In certain cases where an invoice has
multiple line items and the discrepancy is only with respect to one line
item, equity demands that detention proceedings should be restricted only to
the said line item in respect of which there is a violation and the rest of
the consignment should be related without any delay.
|
|
13
|
Officers not accepting the security for release of
goods u/s. 129
|
This is clearly violation of statutory mandate by the
Officers.
|
SOME LEGAL PRECEDENTS
Some judicial
precedents on this subject are as follows:
- Failure to report material
particulars on the statutory documents under movement is a statutory offence.
Penalty is for this statutory offence and there is no question of proving of
intention or of mens-rea as the same is excluded from the category of essential
element for imposing penalty. Guljag Industries vs. CTO [2007] 9 VST 1 (SC).
- Declaration uploaded on the
website after the detention of goods does not absolve the penalty of the
assessee. The time of declaration is critical. Asst. State Tax officer vs.
Indus Towers Ltd 2018 (7) TMI 1181(Ker-HC)
- Squad / enforcement
officers cannot detain goods over dispute on HSN/ classification. This is under
the domain of the assessing authority. At the most, the squad officer could
report this discrepancy to the assessing authority for further action at their
end. Jeyyam Global Foods (P) Ltd., vs. UOI 2019 (2) TMI 124 (Mad-HC)
- Supreme Court CST vs. PT
Enterprises (2000) 117 STC 315 (SC) – The inspecting authority has the
powers to question the valuation of the goods under the Madhya Pradesh Sales
Tax Act. This decision was rendered in view of the specific requirement that
inspecting authority could detain goods in case of evasion on the value of goods.
CONCLUSION
Provisions of
interception, detention and seizure are open ended giving wide powers to the
officer. This could result in dual taxation of the very same goods without any
input tax credit in the hands of the recipient. Moreover, diverse practices are
being followed among the field formations across the country leading to
inequities in application of law. Certain legal provisions are overlapping
giving choices to the administration over the subject goods and the inclination
of the administration is to choose a stricter provision thereby making the other
provision practically redundant. There
are multiple challenges on the front of administration, appeal, etc., which
needs to be addressed both at the macro and micro level by the GST council.
Therefore, it is imperative that the GST council and the Government take
proactive steps in cleansing the entire scheme in order to bring uniformity in
implementation of law across the country. 
