News & Updates

Case Law Sleevco Traders v. Additional Commissioner

Jul 15, 2022

ISSUE INVOLVED
Can demand be raised in a Bill-to-ship-to transaction where the E-way bill mentions address of ultimate buyer as place of delivery?

HELD THAT
E-way bill mentioning the address of the ultimate buyer as place of delivery is a valid document in a Bill-to-ship-to transaction and cannot be contested by the Revenue.

Case Reference : HIGH COURT OF ALLAHABAD
Sleevco Traders v. Additional Commissioner
WRIT TAX NO. – 464 OF 2021
Order Date: 17-05-2022

Contributed By

CA Shweta Dubey
Deputy Manager – GST
shwetadubey@mehragoelco.com

CA Vaibhav Jain
Partner
vaibhavjain@mehragoelco.com

Facts of the Case: –

In the present case the petitioner M/s Sleevco Traders , engaged in the business of purchase and sale of PVC Resin received a purchase order for supply of the above mentioned products from K.R. industries,Sandila , U.P. In turn the petitioner placed its purchase order to a Maharashtra party SAFE CLIMBER, who sent the goods, mentioning the name of the petitioner under the head of buyer and and consigned to K.R. industries,Sandila , U.P. on the tax invoice. Further the e-way bill was also generated where the sender’s name has been mentioned as SAFE CLIMBER and name of the purchaser i.e petitioner has been mentioned and ship to K.R. Industries ,Sandila . After reaching the state of U.P. , the said goods along with the vehicle was detained by the authorities , consequently the following documents were produced – tax invoice of the petitioner , bilti and e-way bill. Notice u/s 129(3) of Central GST Act was issued for determining the tax and penalty in respect of release of the goods and vehicle. The authorities without considering the reply submitted by the petitioner passed an order demanding tax and penalty which was deposited by the petitioner and afterwards preferred an appeal which was dismissed.

Hence the present petition.

Legal Provisions:-

Section 68 of the CGST Act,2017 “empowers the competent officer to inspect any conveyance carrying consignment of goods and verify any such documents as may be prescribed where the competent officer intercepts the said conveyance. He may require the person in charge of the said conveyance to produce such document prescribed under the said

Act for verification and such person shall be liable to produce the document and also allow to inspect the goods.”

Section 129 of the CGST Act,2017 “ provides that where any person transports any goods while they are in transit in contravention of the provisions of the Act or Rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure shall be released on payment of applicable tax and penalty equal to one hundred percent of the tax payable on such goods.” Further Section 129 (3) of the CGST Act ,2017 “provides that proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).” Sub-section 6 “provides that where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within [fourteen days] of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of Section 130 of the CGST Act, ,2017.” Further Sub-section 5 “provides that on payment of amount referred to in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.”

Section 130 of the CGST Act,2017 “provides that notwithstanding anything contained in this Act, if any person receives any goods in contravention of any provisions of this Act or the rules made thereunder with intent to evade payment of tax then such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under Section 122 of the CGST Act,2017.

Rule 138 of the CGST Rules,2017 “provides that every registered person who causes movement of goods of consignment value exceeding fifty thousand rupees shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal.”

Rule 138 A of CGST Rules,2017 “provides certain documents and devices to be carried by a person- in-charge of a conveyance such as the invoice or bill of supply or delivery challan, as the case may be and a copy of the e-way bill in physical form or the e-way bill number in electronic form.”

Judgement:

After considering the arguments made by the counsels of both the petitioner and the respondent, the Learned Judge held the observation as follows :-

The revenue had not even once during the proceedings contended that the goods which were coming from Maharashtra, the delivery of the same was taken from transporter and the goods were unloaded in the business premises of the petitioner and thereafter the goods were again sent from the business premises of the petitioner to its ultimate buyer i.e. K.R. Industries, Sandila.

There was no contravention of the provisions of Section 129 of the CGST Act, 2017 as before the start of journey e-way bill from Maharashtra and ending at the place of ultimate purchaser i.e. K.R. Industries, Sandila was generated.

The Revenue had also not objected on the validity of the e-way bill generated by the Maharashtra party as the goods mentioned in the tax invoice issued by the petitioner and the one mentioned in the e-way bill of the Maharashtra party were same. Some difference of value noticed due to charges of CGST/SGST on the tax invoice issued by the petitioner does not suggest any contravention of the provisions of the Act read with Rule 138 A of the CGST Rules, 2017.

Once the valid document i.e. the e-way bill was accompanying the goods, the detention of goods and vehicle by the authorities was unlawful and hence they are under obligation to release the vehicle.

On identical set of facts, the Apex Court in the case of Assistant Commissioner (S.T.) and others Vs. M/s Satyam Shivam Paper Pvt. Limited and another in Special Leave to Appeal (c) No. 21132 of 2021 decided on 12.1.2022, while dismissing the appeal of the State had enhanced the cost awarded to the writ petitioner considering the unwarranted hardship caused to them.

In pursuance of the above Judgement, the Hon’ble Lordship in the present case observed that there was neither any intention to evade the payment of tax nor any contravention of the provisions of the Act as all valid documents i.e. e-way bill, tax -invoice and bilti were accompanying with the goods as required under the Act, therefore the proceedings initiated against the petitioner needs to be dismissed.

Since the authorities had dragged the petitioner in an unnecessary litigation, the writ petition was allowed with cost of Rs. 5000/- payable to the petitioner and the impugned order was set aside.

Author’s View:

Considering the facts of the case and the judgement given by the Hon’ble Court, it can be easily inferred that the petitioner had no intention of tax evasion. Further, the Tax authorities were fully aware of the nature of transaction being a Bill-to-ship-to transaction i.e being direct delivery of goods at the place of ultimate buyer, as was correctly mentioned in the E-way bill. Also all the valid & requisite documents required as per the GST Act were available and no discrepancy was pointed out by the authorities against the goods mentioned in the E-way bill & the Tax invoice.

Therefore, the submissions made by the Revenue do not give rise to even a question of fact, least to say about a question of law. The unwarranted act of the Revenue of dragging the petitioner into unnecessary litigation with a malicious intent, resulting in undue hardships to the petitioner is unconstitutional. Hence the Court’s decision of awarding compensation to the aggrieved petitioner is a fair and just act , setting up precedence for future, which would compel the Revenue to adhere to the principles of correct application of mind before issuing any such frivolous notice under the said Act.

Notes to News & Updates:

Please note that Facts of the Case and Queries are as summarized by us based on our reading of case law and our interpretation based on law prevailing as on the judgement date. No assurance is being given on the correctness of the facts, and our opinion / analysis is given solely based on facts provided herein above.

Please note that this news and update is prepared by author for spreading knowledge, and the view is a matter of interpretation, and law is subject to various interpretations. The application of law and impact can vary widely based on the specific facts and interpretation of statute. Our views expressed above is based on facts and assumptions indicated above. No assurance is given that the authorities and/or Courts will concur with our views. We do not accept any liability, for any loss or damage caused as a result of any action taken on the above opinion expressed by us.

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Therefore, the submissions made by the Revenue do not give rise to even a question of fact, least to say about a question of law. The unwarranted act of the Revenue of dragging the petitioner into unnecessary litigation with a malicious intent, resulting in undue hardships to the petitioner is unconstitutional. Hence the Court’s decision of awarding compensation to the aggrieved petitioner is a fair and just act , setting up precedence for future, which would compel the Revenue to adhere to the principles of correct application of mind before issuing any such frivolous notice under the said Act.

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