GST Update on detention of goods on the allegation of ‘wrong destination’ 39/2020-21

GST Update on detention of goods on the allegation of ‘wrong destination’

There have been many high court decisions deciding on the detention of vehicle and goods on minor and clerical errors. These have been in favour assesses. We would also like to bring your attention to the “GST update on detention of goods on the basis of under valuation” published on our website www.capradeepjain.com. In this case the honourable high court of Chhattisgarh had stated that the goods cannot be detained on the ground that the goods were undervalued. Further the goods can be detained under Section 129 only when the requisite documents as per Section 68 were not carried by the person in charge. In this update we shall discuss another decision issued by Honourable Telangana High court wherein the goods were detained on the ground of ‘wrong destination’.

Notice under Section 129(3) of CGST Act 2017 was issued alleging wrong destination and the detention of vehicle and goods as well. The brief facts of the case are that the goods were moved from Karnataka to Hyderabad with all the required documents. The vehicle was detained at a place which is away from the place where they were delivered. The petitioner was forced to pay tax amount and penalty as mentioned in the notice as there was marriage in his house and was pressurized by the driver to release his vehicle. So the petitioner didn’t have time to protest and had paid tax along with penalty.

The petitioner contended before the court that detention under Section 129(3) was not valid as the person in charge was carrying the required documents. Since the driver was from Karnataka, he was not familiar with the route to the place of delivery and moved forward.

The Telangana High court held that since the driver was from Karnataka it is perfectly possible to lose his way on account of his being unfamiliar with the roads in the city of Hyderabad. On the issue of payment of tax and penalty by the petitioner, reliance has been placed by the high court on the Supreme court judgement given in the case of ‘Dabur India Ltd. Vs. State of Uttar Pradesh’. It was held that “a litigant cannot be coerced by the government to make payment of duties which the litigant is contending not to be leviable. The Supreme Court held that though the State is entitled to enforce payment and to take all legal steps, it cannot be permitted to play dirty games with the citizens to coerce them in making payments when the citizens were not obliged to make them. It also observed that if any money is due to the Government it should not take extra-legal steps to recover it.”

So the Telangana High court has directed to refund the tax along with penalty to the petitioner with interest rate of 6% p.a.

The above decision is yet another example of the undue exercise of powers by the mobile squad officers entrusted with the task of ensuring movement of goods accompanied by proper documents as prescribed by the Law. Practically, many instances are reported wherein goods are detained even when they are accompanied with requisite documents. The trade and industry should file representation to the government for issuing a strict provision for taking action against the officers for wrongly invoking provisions under section 129 of the CGST Act, 2017 so that the discretion to invoke these provisions are exercised cautiously by the officers.

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GST Update on detention of goods on the allegation of ‘wrong destination’ 39/2020-21

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