IN HIGH COURT OF KERALA AT ERNAKULAM PRESENT HONOURABLE MR. JUSTICE ALEXANDER THOMAS FRIDAY, 31ST DAY OF JANUARY 2020 / 11TH MAGHA, 1941 WP(C).No.1141 OF 2020(P) PETITIONER: UMIYA ENTERPRISE, INDRADHANUSH APARTMENT, SHOP NO 7.8.9, T.D.ROAD, ERNAKULAM, KOCHI-682 035, (REPRESENTED BY PARTNER, PANKAJ. G. PATEL). BY ADVS. SRI.K.N.SREEKUMARAN SRI.P.J.ANILKUMAR (A-1768) SRI.N.SANTHOSHKUMAR RESPONDENTS: 1 ASSISTANT STATE TAX OFFICER, STATE GOODS AND SERVICE TAX DEPARTMENT, SQUAD NO IV, PALAKKAD-678 001. 2 STATE TAX OFFICER, STATE GOODS AND SERVICES TAX DEPARTMENT, SQUAD NO IV, PALAKKAD-678 001. OTHER PRESENT: DR.THUSHARA JAMES, GOVT.PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 31.01.2020, COURT ON SAME DAY DELIVERED FOLLOWING: W.P.(C)No.1141/2020 2 ALEXANDER THOMAS, J.W.P.(C)No.1141 of 2020 Dated this 31st day of January, 2020 JUDGMENT prayers in above Writ Petition (Civil) are as follows:- (i) issue Writ of Certiorari, or any other appropriate writ, order or direction as this Hon'ble Court deems fit and proper in circumstances of case, calling for records leading to issue of Ext.P6 order and Ext.P7 notice and to quash them; (ii) issue writ of mandamus or other appropriate writ, orders or directions, directing 1 st respondent to release goods to petitioner without collecting any tax or penalty or security under S.129(1)(c); 2. Sri. K.N. Sreekumaran, learned counsel appearing for petitioner and Dr. Thushara James, learned Government Pleader appearing for respondents. 3. case projected in this Writ Petition (Civil) are as follows:- petitioner is dealer in plywood, particle boards and allied items registered under CGST & KGST Acts on migration to GST regime with effect from 1.7.2017. In regular course of business, petitioner's main supplier M/s. Rukmoni Boards Pvt. Ltd, Chennai despatched plywood under cover of valid invoice and E-Way bill on 10.1.2020 to petitioner. 1 st respondent intercepted conveyance containing consignment invoking provisions in Sec.129 alleging defects that no IGST is seen collected in tax W.P.(C)No.1141/2020 3 invoice which amounts to contravention of Sec.5(1) of IGST Act read with Rule 46(e) & (m) of CGST Rules. petitioner was called upon to show cause as to why amount of tax Rs.1,20,985/- and same amount as penalty under IGST Act should not be imposed. It is pointed out that alleged contravention of provisions is not at all valid reason for suspecting genuineness of consignment. supplier of goods is registered dealer in Tamil Nadu holding valid GST registration. In Ext.P-1 invoice element of tax happened to be wrongly shown as CGST and SGST @ 9% as against IGST of 18%. This is inadvertent mistake committed by new Accountant of supplier. But in Ext-P2 E-way Bill tax has been correctly declared as IGST Rs.1,20,985/-. E-Way Bill issued under Rule 138 of GST Rules generated on line is fundamental document proving correctness of goods transported. clerical error in invoice will not prejudice Revenue in any manner and returns will automatically set right such trifling errors in documentation. However, E-Way bill having been correctly generated, any adverse presumption of tax evasion is wholly out of context and untenable. It is also submitted that as per provisions in Sec.126 of GST Act dealing with general disciplines related to penal proceedings are not to be initiated for minor breaches of tax regulations or procedural requirements, omission or mistake in documentation. Despite filing convincing explanation, 1 st respondent is not inclined to release goods without payment of tax W.P.(C)No.1141/2020 4 and penalty. In light of these averments and contentions, petitioner has filed instant Writ Petition (Civil) with aforementioned prayers. 4. Sri. K.N. Sreekumaran, learned counsel appearing for petitioner would strongly urge that though in Ext.P1 invoice, element of tax happened to be wrongly shown as CGST and SGST @ 9% as against IGST @ 18% involved in this transaction, same was only inadvertent mistake committed by new Accountant of supplier in Tamil Nadu. But, that heart of matter is that in Ext.P2 E-Way bill tax has been correctly and properly declared as IGST Rs.1,20,985/-, which is at rate of 18% and that E-Way bill issued under Rule 138 of GST Rules generated on line is fundamental and basic document proving correctness of goods transported and bonafides in transaction. Further that merely there are clerical errors in invoice can be basis for respondents to even remotely suspect any element of tax evasion in present transaction and that clerical error in invoice will not in any manner prejudice Revenue and returns will automatically set right such trifling errors in documentation. It is again thus reiterated learned counsel appearing for petitioner that E- Way bill having been correctly generated, any adverse presumption of tax evasion is wholly misplaced and untenable and that core of legal principles flowing from provisions contained in Section 126 of GST Act, which deals with general disciplines related to penal W.P.(C)No.1141/2020 5 proceedings, is that such proceedings are not to be initiated for minor breaches of tax regulations or procedural requirements, omission or mistake in documentation and that said legal principle could be befittingly applied to facts of this case for simple reason that fundamental and basic document, which is E-Way bill issued under 138 of GST Rules, has correctly shown that IGST tax at rate of 18% and that due tax amount of Rs. 1,20,985/- is also shown and said amount fully reflect 18% of taxable value in present transaction. Further, Sri. K.N. Sreekumaran, learned counsel appearing for petitioner would pertinently take this Court's attention to Ex.P2 E-Way bill given on page No.11 of paper book of writ petition, wherein, in coloumn No.3 as against taxable amount, figures are shown as Rs.5,80,018.76 and Rs.92,120.80, thus totalling to Rs.6,72,139.56/-. It is further pointed out that figures given immediately under table appended to serial No.3 of Ext.P2, said total taxable amount is thus shown as Rs.6,72,139.56 and tax amount is correctly shown as IGST amount of Rs.1,20,985.12, which is nothing but 18% of above said total taxable amount of Rs.6,72,139.56. Accordingly, it is urged by Sri. K.N. Sreekumaran, learned counsel appearing for petitioner that Ext.P2 which is basic documentary transaction would clearly show that IGST tax amount has been correctly and properly shown therein etc. 5. argument was raised on side of respondents that tax and penalty has been demanded as per impugned W.P.(C)No.1141/2020 6 Ext.P7 order as otherwise there will be loss of tax revenue to State of Kerala. In that regard, petitioner has also made following contentions:- It is pointed out that supply in this case is covered by provisions in Sec.7 of IGST Act 2017. As per sub-sec.1 of Sec.7 where locations of supplier and place of supply are in two different States supply shall be treated as supply of goods in course of interstate trade or commerce. Sec.5(1) of IGST Act provides for levy of tax called IGST on all interstate supplies and collected in such manner as prescribed. In matters relating to registration, accounts and records, returns, payment of tax, assessment etc. under IGST Act provisions of Central Goods and Services Tax Act shall mutatis mutandis apply as specifically stated in Sec.20 of IGST Act. Sec.9 of CGST Act deals with levy and collection of tax and Sec.12 deals with time of supply of goods. As per Sec.12 (1) liability to pay tax on goods shall arise at time of supply as determined in accordance with provisions of section. These provisions would go to show that liability to pay tax on interstate supply of goods u/s7 of IGST Act would arise at time of supply of goods by supplier on raising Ext-P1 invoice and Ext-P2 E-Way bill. Sec.37 of CGST Act provides that every registered person shall furnish electronically returns showing outward supply of goods as prescribed in Rule 59 of CGST Rules. Sec.39 provides for furnishing returns electronically showing inward and outward supply of goods, input tax credit W.P.(C)No.1141/2020 7 availed, tax payable etc. in accordance with Rule 61 of CGST Rules by filing return in Form 3B on or before 20 th day of succeeding month. These provisions will clearly go to show that supplier M/s.Rukmoni Boards P. Ltd., Tamil Nadue is liable to collect and pay tax involved in interstate supply of goods covered by Ext-P1 invoice and Ext-P2 E-Way bill. above supplier being registered taxable person in Tamil Nadu State, IGST involved in sale has to be paid over before GST Autorities having jurisdiction on it in Tamil Nadu. provisions in GST Acts and Rules being explicitly clear, apprehension of respondent that State of Kerala is prejudiced by wrong description of tax in invoice is out of context. It is also pointed out that petitioner is permitted to claim tax collected by supplier only if it is properly declared in their return of tax by payment online. If proper payment of tax by supplier by filing return is not made, petitioner will be disabled from claiming any input tax credit. In such context petitioner will stand to lose, for petitioner will have to pay entire tax on sales without getting any credit for input tax. For this reason also suspicion of contravention of Sec.129 of GST Act and consequent attempt at evasion of tax would lack any factual and legal teeth. That petitioner is taxable person discharging its tax liability by filing true and correct returns and payment of tax. interstate supply of goods in question being entered in KVATIS Portal by supplier electronically through valid E-Way bill which W.P.(C)No.1141/2020 8 cannot be altered, any possibility of evasion of tax will not arise at all. 6. After hearing both sides and after careful evaluation of facts and circumstances of case, it is to be noted that matter in relation to detention of goods as per impugned Ext.P7 proceedings will have to be subjected to adjudication proceedings and only thereafter it can be finalised. Therefore, this Court need not make any final pronouncement on any of above said issues. It is for petitioner to raise all those contentions as and when he is given opportunity of hearing prior to finalisation of adjudication proceedings pursuant to detention proceedings referred to in Ext.P7. However, this Court is constrained to say that, after hearing both sides, petitioner has made out strong case by which this Court is persuaded to accept view that goods and vehicle detained pursuant to Ext.P7 order could be released to petitioner on basis of simple bond and it need not be insisted that petitioner will have to furnish bank guarantee for amounts demanded in Ext.P7 order. 7. On being queried, respondents do not have any case that petitioner concern has any previous adverse records of tax evasions of non-compliance of tax laws. above said contentions raised by petitioner on basis of Ext.P2 E-Way bill is substantially strong to persuade this Court that goods could be released on condition that petitioner executes simple bond in that regard. Hence, it is ordered that 1 st respondent shall W.P.(C)No.1141/2020 9 immediately release goods and vehicle detained pursuant to Ext.P7 order to petitioner on petitioner executing simple bond in that regard. However, 1st respondent will be at liberty to proceed further with adjudication proceedings in relation to Ext.P7 order and for that purpose, notice of hearing may be given to petitioner and petitioner should be permitted to give detailed written submissions in matter. It is pointed out by Sri. K.L. Sreekumaran, learned counsel appearing for petitioner that basic supplier is in Tamil Nadu and since transaction was on 10.1.2020, time limit for them to file returns in that regard under IGST Act is upto 20th of next month, which is in instant case would be 20.02.2020. Further that steps will be taken by petitioner to ascertain whether local supplier in Tamil Nadu has filed return in that regard in relation to above said transaction etc. Therefore, it may be better for 1 st respondent to wait till 20.02.2020 before opportunity of personal hearing is granted to petitioner for finalisation of adjudication proceedings pursuant to Ext.P10 order. petitioner may take steps to ensure that details are collected from local supplier involved in this transaction, which is based in Tamil Nadu, to ascertain whether said agency has duly filed their returns showing above said transaction also etc. and if such details are also available, petitioner may produce those materials also before 1st respondent, as matter of abundant caution to convince 1st respondent that there is no loss of revenue involved in this case W.P.(C)No.1141/2020 10 etc. Thereafter, 1st respondent will afford reasonable opportunity of being heard to petitioner through authorised representative or counsel, if any and then will pass final orders in adjudication proceedings finalsing same, without much delay. entire proceedings in that regard may be duly completed on or before 15.3.2020. In this regard, it is ordered that all contentions raised by petitioner herein and any of contentions that may be raised by petitioner before 1st respondent should be duly adverted to and considered by 1st respondent before he passes orders finalising adjudication proceedings in that regard. petitioner may produce certified copy of this judgment along with written submissions as aforestated before 1st respondent. 8. Accordingly, it is ordered that goods and vehicle detained pursuant to Ext.P7 shall be released forthwith by 1 st respondent to petitioner, on his executing simple bond and without insisting on petitioner furnishing bank guarantee for demanded value. Thereafter 1st respondent will take necessary action to comply with other directions for finalisation of adjudication proceedings pursuant to Ext.P-7, as aforestated. With these observations and directions, above Writ Petition will stand finally disposed of. sd/- ALEXANDER THOMAS, JUDGE. acd W.P.(C)No.1141/2020 11 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF TAX INVOICE NO RPBL/1437/19-20 DATED 10.1.2020 ISSUED BY SUPPLIER M/S RUKMONI BOARDS PVT LTD CHENNAI. EXHIBIT P2 TRUE COPY OF E-WAY BILL NO 511160140768 DATED 10.1.2020 ISSUED AGAINST EXT P-1. EXHIBIT P3 TRUE COPY OF STATEMENT IN FORM GST MOV-01 DATED 13.1.2020 ISSUED 1ST RESPONDENT EXHIBIT P4 TRUE COPY OF ORDER FOR PHYSICAL VERIFICATION IN FORM GST MOV-02 DATED 13.1.2020 ISSUED BY 1ST RESPONDENT EXHIBIT P5 TRUE COPY OF PHYSICAL VERIFICATION IN GST MOV-04 DATED 13.1.2020 ISSUED BY 1ST RESPONDENT EXHIBIT P6 TRUE COPY OF NOTICE IN FORM GST MOV-06 DATED13.1.2020 ISSUED BY 1ST RESPONDENT EXHIBIT P7 TRUE COPY OF NOTICE IN FORM GST MOV-07 NO GST/VC/MS-04/108/19-20 DATED 13.1.2020 ISSUED BY 1ST RESPONDENT EXHIBIT P8 TRUE COPY OF REPLY FILED BY SUPPLIER M/S RUKMONI BOARDS PVT LTD, CHENNAI Umiya Enterprise v. Assistant State Tax Officer, Palakkad / State Tax Officer, Palakkad