GST Update No 166 on mismatch in quantity

With the introduction of GST, the Inspector Raj system is abolished and concept of E-way bill came into existence. This was done to remove the concept of check posts and roadside checking. However, till date this whole practice is not yet incorporated successfully failing which the revenue authorities take actions u/s 129 of CGST Act, 2017. One such issue came in front of Haryana High Court in the case of Raghav Metals V/s State of Haryana and Punjab. The decision imparted by the Court in the said case is subject matter of our present update. The petitioner a business unit registered in Delhi, purchases raw material from dealers located throughout the country and sold its product to Company located in Rajasthan. The goods were in transit and were intercepted by departmental authorities on 27.11.2021. The goods were accompanied by valid invoice and e-way bill. The petitioner argued that proceedings u/s 129 are without jurisdiction and therefore, deserves to be quashed. The revenue authorities issued GST MOV07, reply of which was filed on 03.12.2021. The revenue authorities issued order u/s 129 of CGST Act, 2017 in form GST MOV06 regarding detention of the goods. The departmental authorities contended that discrepancies as regards to mismatches in actual quantity of goods in transit and as shown in invoice and e-way bill were found of 90 kgs resulting into evasion of tax. Reliance was placed on the case of M/s. Shiv Enterprises vs. State of Punjab and others – CWP-18392- 2021. The Court held that from perusal of einvoice quantity of goods consigned is 10430.7 kgs and amount of Rs. 1276717.68/- is paid as tax on consignment. However, the actual quantity was 10520 kgs. Since the difference of weight is less than 1% and tax evasion shall not be more than Rs. 11000/-, it cannot be concluded that the petitioner had any intention of evasion of tax. Therefore, mere mismatch in the quantity does not amounts to detention u/s 129 of CGST Act, 2017. The above decision is a welcoming decision by the business houses wherein Court supported the contention that mere inadvertent mistakes should not result in detention and imposition of heavy penalties. Reliance can be placed on the case of Tripura High Court in Tirthamoyee Aluminum Products vs. State of Tripura & Ors. in Writ Petition (Civil) no. 1108 of 2018, M.R. Traders vs. Assistant State Tax Officer State of Kerala (Int) in WP(C).No.2713 OF 2020(L). Furthermore, CBIC has also issued a Circular No. 64/38/2018 dated 14.09.2018 wherein the same was clarified. The Government should issue further strict guidelines in this regard so that unwanted litigations and troubles can be avoided.

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GST Update No 166 on mismatch in quantity

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