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GST UPDATE ON INVOCATION OF DETENTION PROVISIONS FOR GOODS SENT ON REPAIR 152/2020-21

GST UPDATE ON INVOCATION OF DETENTION PROVISIONS FOR GOODS SENT ON REPAIR

E way bill has been introduced with the motive to put an end to the prolonged road permit system and inspector raj in India. However, the taxpayers are facing numerous issues daily in relation to e-way bill compliances and further have disputes as regards procedural lapses occurring during preparation of relevant documents for legal movement of goods. Recently, the GST officers had intercepted truck which was carrying old machine sent for repair purpose and invoked the provisions of section 129/130 of the CGST Act, 2017 pertaining to detention, seizure and confiscation. The assessee challenged this act before the Hon’ble Gujarat High Court in the case of M/SVALIMOHAMMED JUSAB & CO. V. STATE OF GUJARAT [2019] 110 TAXMANN.COM 488 (GUJARAT) and the outcome of this petition is the subject matter of discussion of our present update.

In the present case, the vehicle came to be intercepted at 18:15 hours on 20.8.2019 for non-generation of e-way bill and immediately thereafter, at 7.49 p.m., e-way bill came to be generated. The attention of the court was invited to the provisions of section 2(108) of the GGST Act, 2017 to submit that taxable supply means a supply of goods or services or both which is leviable to tax under the Act. It was submitted that in the present case, the goods were merely being transported back to the premises of Nirma Ltd. for job-work and that no goods or services were leviable to tax in respect thereof. Reference was made to provisions of section 122 of the GGST Act, 2017 and more particularly, clause (xiv) thereof to submit that the same provides that where a taxable person who transports any taxable goods without the cover of documents as may be specified in this behalf, he shall be liable to pay a penalty of Rs. 10,000/- or an amount equivalent to the tax evaded or the tax not deducted under section 51 etc. It was submitted that in this case, the petitioner is not liable to pay any tax and hence, at the most, the petitioner could be made liable to pay penalty of 10,000.

It was held that the documents produced on record, prima facie indicate that old and used Winch Machine was being transported from premises of Yadav Trading Co. where it had been sent for repairs and was being transported back to Nirma Ltd., there is substance in the submissions made by the learned advocate for the petitioner that at best, the petitioner would be liable to pay fine of Rs. 10,000/- as contemplated under clause(xiv) of section 122 of the GGST Act, 2017. Under the circumstances, the High Court provided interim relief to the petitioner by directing the respondents to forthwith release Truck No. GJ-04-V-4335 along with the goods contained therein subject to the petitioner depositing a sum of Rs. 10,000/- with the respondent authorities.

In the similar case ofM/s NEVA PLANTATION PRIVATE LIMITED, 2020- VIL-08-GSTAA (HP)],the Authority held that it is very clear that goods are only sent for repair and it is not a sale transaction. Thus, provisions of section 129 of the Act are not attracted and the order is set aside. The tax and penalty deposited by the appellant under section 129(1) may be refunded and a penalty of Rs 10,000/- is imposed on the taxpayer under section 122(1) of the Act.

The above decisions have taken a liberal view as regards default in generation of e way bill in case of goods sent for repair as the goods are not liable to GST as such. The mechanism of e-way bill has been introduced to keep check on movement of taxable goods and so default in generation of e-way bills in case where the goods sent are not considered as supply should not attract stringent and harsh provisions of section 129/130 of the CGST Act, 2017.

This is solely for educational purpose.

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