M/s Indus Towers Limited Versus The Assistant State Tax Officer
GST
2018 (1) TMI 1313 – KERALA HIGH COURT – [2018] 1 GSTL 61 (Ker), 2018 (11) G. S. T. L. 229 (Ker.)
KERALA HIGH COURT – HC
Dated:- 17-1-2018
W. P. (C) No. 196 of 2018
GST
P. B. Suresh Kumar, J.
JUDGMENT
Petitioner is a public limited company engaged in the establishment and maintenance of towers for telecom service providers. They are registered under the Central Goods and Services Tax Act (the CGST Act) and the Kerala State Goods and Services Tax Act (the SGST Act).
2. It is stated by the petitioner that the materials procured by them for their use at the various tower locations in the State are being stored at their warehouses and the same will be transported to the various tower locations as and when required. On 7.12.2017, in terms of Ext.P1 GST tax invoice, the petitioner procured the batteries required for their various tower locations including Gandhi Nagar in Ernakuam District and Ambalapp
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g transported on a delivery chalan in lieu of invoice, the same shall be declared as specified in Rule 138 of the said Rules. Rule 138 of the State GST Rules provides that persons in charge of conveyances carrying consignment of goods, where the goods are transported on a delivery chalan, shall carry along with the goods a declaration in Form KER-1 uploaded before such transportation of goods in the Kerala Value Added Tax Information System portal (KVATIS). The essence of Ext.P3 notice, therefore, was that the goods transported by the petitioner were not accompanied by the uploaded Form KER-1 declaration. The petitioner sent Ext.P4 reply to Ext.P3 notice stating that it is on account of an inadvertent omission on the part of their employees that Form KER-1 declaration was not uploaded and that Form KER-1 declaration in respect of goods covered by the delivery chalan was uploaded immediately on receipt of Ext.P3 notice. Along with Ext.P4 reply, a copy of the uploaded declaration in Form
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fect noted in the documents that accompanied the goods was absence of Form KER-1 declaration and that since Form KER-1 declaration was uploaded and made available to the first respondent immediately on receipt of notice, there is no justification for the continued detention of the goods. It was also contended by the learned counsel for the petitioner that the authenticity of the delivery chalan issued by the petitioner in the instant case is not disputed by the first respondent in Ext.P3 notice and therefore, the first respondent cannot be heard to contend that the transaction involves a taxable supply. According to the learned counsel, since the transaction does not involve a taxable supply, the goods cannot be detained invoking the power under Section 129 of the CGST and SGST Acts.
5. Per contra, the learned Government Pleader submitted that going by the provisions contained in Section 129, the goods can be detained for violation of the provisions contained in the CGST and SGST Acts
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services tax under the said statutes. Section 7 of the statutes which are identical in dealing with the scope of supply, reads thus;
7. (1) For the purposes of this Act, the expression “supply” includes-
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without consideration, and (d) the activities to be treated as supply of goods or services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub- section (1)-
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are
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been availed on such assets.
2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.
3. Supply of goods-
(a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.
In the light of the aforesaid provisions, there cannot be any doubt that when a taxable person transports the goods procured by them for own use to the site where the goods are to be consumed, the transact
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s not in accordance with Rules 55 and 138 of the State GST Rules. The question, therefore, is as to whether the detention as provided for under Section 129 of the statutes was justified merely for non compliance of Rules 55 and 138 of the State GST rules.
7. Chapter XIX of the statutes containing Sections 122 to 138 deals with offences and penalties. Among the said provisions, Sections 122 to 128 deal with imposition of penalties. Section 129 deals with detention, seizure and release of goods and conveyances in transit. Sections 130 and 131 deal with confiscation of goods or conveyances and levy of penalty and Sections 132 to 138 deal with the various offences under the Act. Among the said provisions, Section 129 dealing with detention, seizure and release of goods and conveyances in transit, reads thus
“129. Detention. seizure and release of goods and conveyances in transit.
(1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any g
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er of the goods does not come forward for payment of such tax and penalty;
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed: Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.
(3) The 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).
(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified
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ds liable to tax under this Act without having applied for registration; or
(iv) contravenes any of the provisions of this Act or the rules made there under with intent to evade payment of tax; or
(v) uses any conveyance as a means of transport for carnage of goods in contravention of the provisions of this Act or the rules made there under unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to penalty under section 122.
(2) Whenever confiscation of any goods or conveyance is authorized by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:
Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon.
Provided further that the
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n vest in the Government.
(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
(7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.
A combined reading of Sections 129 and 130, especially the provision contained in sub section (6) of Section 129 indicates that the detention of the goods is contemplated under the statutes only when it is suspected that the goods are liable to confiscation. This aspect is seen clarified by the Central Board of Excise and Customs in the FAQs published by them on 31.3.2017 also. Section 130
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