GST update No 290 on no difference between working day and holiday in matters related to detention

Looking at the present scenario, the issue regarding rampant and continuous detention of goods is a matter of grave concern for the taxpayers. Apart from facing financial burdens such as penalties, delay in working of businesses due to detention of order is not less than a nightmare for the taxpayers. However, with the passage of time, various High Courts have come forward and stepped into the issue to grant relief to the taxpayers, yet serious repercussions are being faced by the business houses. On similar lines, one case was recently reported before Madras High Court in the case of M/S D.K. ENTERPRISES V/S THE ASSISTANT/ DEPUTY COMMISSIONER. The decision imparted in this case is subject matter of discussion of our present update.The petitioner sought a mandamus directing to release goods detained on 13.08.2022 by Roving Squad of Commercial Tax Department. The consignment was intercepted on 13.08.2022 at 12:15 am and thereafter GST MOV-01 was also issued on the same day. Subsequently, GST MOV-02 was also issued. The goods were intercepted on the basis of presumption of officer that they were unloaded at an unregistered place. No details in this respect were provided further. It was argued that on 13.08.2022, MOV-04 was issued after which there had been no notice issued by the respondent till 24.08.2022. However, the same should have been issued within 7 days from date of detention/ seizure. The notice ostensibly issued dated 22.08.2022 was produced during the course of hearing. The petitioner argued that proper procedure regarding detention of goods was not complied with since the same is in contrary to the provisions contained in the Statue and Regulations. Further, representation was made requesting the conveyance to proceed on its way and setting out an explanation for alleged discrepancy. It was submitted that there is violation of provisions of Section 129 of CGST Act, 2017. The Counsel for the respondent placed reliance on Circular No. 41/15/2018-GST dated 13.04.2018 issued by CBIC. Further it was argued that there is no statutory prescription for any forms that are referred in Section 129. It was further argued that the procedure was within time since the limitation of 7 days expires on a holiday, 19.08.2022 being Janmashtami and 20.08.2022 and 21.08.2022 being weekends on which GST department do not function. Therefore, notice has not been issued on 22.08.2022 but on 24.08.2022. The counsel relied on the Section 10 of General Clauses Act, 1897, as per which the proceedings shall be deemed to be completed if it done or taken on the next day afterwards when the Court or office were open after a holiday. The Court was of the view that the procedure mentioned in the Circular is applicable to the sequence of events arising in the present case. It was concluded that there are serious flaws in the procedure since neither the detention order nor the SCN was issued within time. As per the provisions of Section 129, it is apparent that the detention order is to be issued prior to issuance of SCN. It was further stated that the officer not having obtained written permission from superiors for extension of time for proceedings, not adhered to the requirement for uploading of Part-B of Form GST EWB-03. It was further held that in matter of detention and seizure, GST department does not recognise the concept of ‘working day’ and ‘holiday’ since there was amendment vide Circular No.49/23/2018-GST dated 21.06.2018 in F.No. CBEC/20/16/03/2017-GST. Moreover, the department officers themselves agrees that the roving squad of the GST Department knows no distinction between working and non-working days and the wing works 24/7 through-out the year. Therefore, both the parties cannot have luxury of delaying the proceedings. Therefore, the act of the departmental officers runs directly contrary to the amendment under the Circular dated 21.06.2018. Thus, it is imperative that such intrusive acts are required to be followed strictly as per statutory provisions. Since the detention is a pre-condition for issuance of SCN, the order is to be issued within 7^th day from date of detention of conveyance being 13.08.2022. As the same is issued on 22.08.2022, it is a serious lacuna.It was further stated that there is no requirement of referring to the provisions of Section 10 of General Clauses Act, since the department itself created a difference between working day and holiday. Further difference was drawn towards MOV-06 and directing the vehicle not to move till further orders. It was therefore, concluded that the matter is contrary to the statue’s requirement and the submissions of department are rejected.The above decision is a welcoming decision favouring the business houses pointing out the gross negligence of the tax officials while initiating any action of detention under section 129 of the CGST Act, 2017. There had been situations in past as well wherein the departmental officers invoked draconian powers like these on inadvertent grounds. It is high time now, that these settled judicial precedents should be followed by them in proper and legal manner failing which will lead to unwanted litigations.

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GST update No 290 on no difference between working day and holiday in matters related to detention

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