GST Update No 130 on seizure of goods on flimsy grounds is sheer harassment

The concept of search and seizure in the taxation regime acts as a legal mechanism to curb evasion of tax and to protect the interest of revenue. The reasonableness of the allegations taken by the revenue authorities is crystalized when the show cause notice is being issued to the assessee. Mere suspicion and assumption on the part of proper officer is not enough to trigger seizure provisions. One such issue was recently dealt by the Hon’ble Allahabad High Court in the case of SHRI SURYA TRADERS V/S UNION OF INDIA. The analysis of this decision is subject matter of our current update. The petitioner is a registered dealer, engaged in the business of selling Ancle (sweet supari) and Varanasi Ashik (Betel Nut Product). The petitioner sold 90 bags of the Betel Nut Product to two different registered dealers by issuing two tax invoices and E-way bill. On interception, it was found that 3 bags of Betel Nut were without tax invoice. Afterwards, revenue authorities issued SCN to the petitioner. The petitioner contended that the transporter by mistake left the invoices. Further, the petitioner contended that even if no tax invoices were issued, only 3 bags should be seized rather than whole lot. The petitioner was of the view that since the value of goods was less than Rs. 50,000/-, E-way bill was not generated. The Standing Counsel of the Department argued that as per Section 129(3) of CGST Act, 2017, E-way should be issued for all the transactions and not just those transactions wherein threshold limit of Rs. 50,000/- is crossed. Further, tax invoice of 3 bags was submitted along with reply of SCN and not prior to that. The Counsel also submitted that the consignment shall be seized in case any discrepancy is discovered in any of the part of the consignment. The Court held that submission of tax invoice along with SCN is not a ground of discrepancy and hence, no adverse effects can be drawn. The court opined that the quasi-judicial authority must act fairly with open mind while exercising their statutory powers. As per Rule 138, if the value of consignment is less than Rs. 50,000/-, there is no requirement to issue E-way bill. If the contention of revenue is upheld that E-way bill should be issued for all the transactions, then sealing limit as provided in the said rule will be redundant. Moreover, if authorities are of the view that any transaction is not properly accounted for in the books of accounts, they should have conducted inspection of business premises of the assessee rather than applying provisions of seizure. The Court held that each transaction is to be viewed independently and therefore, in case of discrepancies, whole of the consignment cannot be seized/detained. Therefore, the court passed the judgement by concluding that the revenue authorities were not justified in seizing the goods as there is no contravention of any provision of the GST Act by the petitioner. The government has tried to establish an atmosphere which enable free flow of trade and commerce but tax authorities are bend upon to harass the trading community. The pro-revenue approach has been highlighted in the above cited case which needs to be considered and revamped by the Government immediately. It must be kept in mind that the legal powers such as search, seizure etc. not only affects the business of the taxpayer but is also a stigma on one’s reputation. The revenue authorities should not use these powers as a tool of recovery to harass the taxpayers.

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GST Update No 130 on seizure of goods on flimsy grounds is sheer harassment

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