GST UPDATE ON VALIDITY OF DETENTION FOR MINOR DISCREPANCY IN E-WAY BILLS ISSUED FOR STOCK TRANSFER 150/2020-21

The mechanism of e-way bill has been developed to ensure that there is no illicit movement of goods without accompanying proper documents. However, it is observed that goods are being detained even for minor procedural irregularities in generation of e-way bill. This update seeks to discuss recent judgment pronounced by Hon’ble Telangana High Court in the case of M/S SAME DEUTZFAHR INDIA PVT. LTD. VERSUS STATE OF TELENGANA [W.P. NO. 13392 OF 2020] wherein the GST department was directed to refund the amount paid towards GST and penalty on the pretext of illegality of the transportation of goods wherein the goods were being sent from corporate office to depot situated in another State.
The petitioner is an engaged in the business of manufacture and sales of tractors and their spares. Its corporate office is located in Tamil Nadu State and it has got depots at different places in the country. Registration Certificate issued to the petitioner by the State of Telangana shows that its principal place of business is Hayathnagar and additional place of business at Bongulur village, Ibrahimpatnam Mandal. The petitioner dispatched 4 tractors to its Depot at Hyderabad under consignment and also issued e-way bill on the same day. The name of the consignor and consignee is the same and the address of the consignee is shown at Hayathnagar. The Departmental Officer detained the lorry on the ground that there was mismatch between the goods in movement and documents tendered and that there is also mismatch between e-way bill and goods in movement. It was alleged that the goods were being transported from Ranipet, Tamil Nadu to Bongulur village,Ibrahimpatnam Mandal, Hyderabad but as per e-way bill, the goods have to be transported from Ranipet to Hayathnagar in the State of Telangana and so there is mismatch in the invoice and the e-way bill.
The Appellant submitted that there was only a stock transfer from its factory to depot. There is no element of sale of goods or services and hence mere transfer of goods inter-state would not attract the provisions of Goods & Service Tax Act because there is no taxable event in it.
The Hon’ble High Court held that the there was no occasion for the departmental authority to collect tax and penalty from the petitioner on the pretext that there is illegality in the transport of goods as it would merely amount to stock transfer and there is no element of sale of goods or services in it. Moreover, the fact that the goods were being transferred to depot could have been verified by the department by accessing GST portal which clearly mentioned the additional place of business of the petitioner.
Accordingly, the Hon’ble High Court has directed the respondent authority to refund the sum of Rs.6,70,448/- collected towards CGST and State GST and penalty from the petitioner with interest at the rate of 9% per annum from March 5, 2020 till date of payment to petitioner by the respondents along with cost of Rs.1,500 to the petitioner.

The above decision is highly appreciable as it seeks to indicate that the intercepting officers need to realise that leniency is to be adopted for transactions of stock transfers as there cannot be any intention to evade GST on such transactions by the assessee. The provisions of detention are to be strictly applied only when there is reasonable belief as regards improper movement of goods with intention to evade GST.

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GST UPDATE ON VALIDITY OF DETENTION FOR MINOR DISCREPANCY IN E-WAY BILLS ISSUED FOR STOCK TRANSFER 150/2020-21

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