GST update on lenient approach for release of detained goods where there is clean track record 117/2020-21

The cases of interception of vehicles for detention on meagre grounds are very common after the implementation of e-way bill mechanism. The present update seeks to discuss recent decision pronounced by the Hon’ble Kerala High Court in the case of M/s UMIYA ENTERPRISE wherein goods were detained for discrepancy in tax charged in invoice and e-way bill. The decision of the High Court is the subject matter of discussion of our present update.
The petitioner’s main supplier dispatched plywood under cover of valid invoice and E-Way bill to assessee. Revenue intercepted the conveyance containing the consignment invoking the provisions in section 129 alleging the defects that CGST and SGST was charged on the invoice whereas e-way bill mentioned IGST charged by the supplier. It was pointed out that the alleged contravention of the provisions is not at all a valid reason for suspecting the genuineness of the consignment. The supplier of goods is a registered dealer in Tamil Nadu holding valid GST registration. In invoice the element of tax happened to be wrongly shown as CGST and SGST @ 9% as against IGST of 18%. This is an inadvertent mistake committed by the new accountant of the supplier. But in E-way Bill the tax has been correctly declared as IGST Rs.1,20,985/-. E-Way Bill issued under Rule 138 of the GST Rules generated on line is the fundamental document proving the correctness of the goods transported. Further that merely there are clerical errors in the invoice can be the basis for suspecting any element of tax evasion in the present transaction and that the clerical error in the invoice will not in any manner prejudice the Revenue and the returns will automatically set right such trifling errors in documentation.
The hon’ble High Court accepted the submissions of the petitioner and also pointed that revenue authority did not have any case that petitioner had any previous adverse records of tax evasions of non-compliance of the tax laws. Accordingly, lenient view should be taken and the goods could be released on condition that petitioner executes a simple bond in that regard. Hence, it was ordered that the authority should immediately release the goods and vehicle detained pursuant to order on assessee executing a simple bond without insisting for bank guarantee. However, as the adjudication was pending, it was directed that all the contentions raised by assessee herein should be duly adverted to and considered by the revenue authorities before passing order.
This case highlights a new point that a lenient approach is to be taken in detention cases wherein the past track record as regards compliance of law is clean. Moreover, in the instant case, there was no revenue loss to the exchequer as such, as the tax was being correctly reflected in e-way bill and that if wrong tax would have been reflected by the supplier, the same would have to be corrected as the recipient would be eligible to avail input tax credit only if correct tax is being reflected in its GSTR-2A. The intention of e-way bill mechanism is to keep a check on movement of goods without tax invoice and to regulate tax evasion but cases booked for clerical errors only lead to harassment of assessees adding to their litigation cost.

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GST update on lenient approach for release of detained goods where there is clean track record 117/2020-21

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