Telangana HC in the case of Vijay Metal Vs. The Deputy Commercial Tax Officer

Case Covered:

Vijay Metal

Versus

The Deputy Commercial Tax Officer

Issue:

Whether it is mandatory that when a truck is carrying goods of TWO e-Way Bills then it has to unload the goods of shorter distance first and then the goods of longer distance or goods of higher weight first and then goods of lesser weight?

Brief Facts of the Case:

• The petitioner is a trader in steel registered under the CGST Act, 2017 having registered office at Ranigunj, Secunderabad. The petitioner in the course of business purchased stainless steel pipes and tubes from M/s. Santosh Steel and Pipes India Private Limited, Dadra, and Nagar Haveli. The petitioner hired M/s. Anmol Parcel Services for transporting the material from Dadra and Nagar Haveli to Secunderabad.

• The said transporter also booked the material of M/s. Simi Steels, Adoni, Kurnool District from the same vendor M/s. Santosh Steels, Dadra, and Nagar Haveli to its business premises at Adoni, Kurnool District. For carrying the material to these two destinations, one at Secunderabad and the other at Adoni, two waybills were generated, one from Dadra and Nagar Haveli to Secunderabad for a travel of 867 kms. and the other from Dadra and Nagar Haveli to Adoni which is at a distance of 940 kms.

• The petitioner alleges that the transporter M/s. Anmol Parcel Services, while loading the goods on the goods vehicle AP13X 6980, loaded the material of the petitioner first, and then loaded the material of M/s. Simi Steels as the quantity of the petitioner amounting to 14320.90 kgs. was more and much heavier than the material of M/s. Simi Steels which was 2018.15 kgs.; and so the latter was loaded on top of the goods vehicle.

• According to the petitioner, the transporter has done so for his operational convenience and it had intended to unload the material on the top of the goods vehicle at Adoni first; that the goods vehicle passed through Patancheru Ring road and crossed Jadcherla on its way to Adoni in Kurnool District, and while the vehicle was on its way to Adoni, it was intercepted at Annasagar, Mahabubnagar District by the 1st respondent on 29.12.2020 and detained by him on the ground that the ‘documents of the vehicle were defective’ and that ‘the transaction in respect of the e-waybill No.601250640413 was concluded at Hyderabad, but they were further transported to Adoni without invoice and e-way bill’ and proposed Rs.3,68,555/- as GST and Rs.3,68,555/- as a penalty, and issued a show-cause notice to the petitioner on 31.12.2020.

• The goods of the petitioner were loaded first and the goods of M/s. Simi Steels were loaded at the top, for operational convenience by the transporter; and that as the goods of M/s. Simi Steels were loaded on top, they would have to first deliver them at Adoni, and then only the balance material would be unloaded at Hyderabad.

Brief Arguments by Petitioner/ Appellant:

The petitioner contends that Section 129 of the GST Act would apply only in cases where it was established that there was intention or possibility of evading payment of tax in respect of the goods being transported, and even if some document such as waybill was missing at the time of verification, it would only create a rebuttable presumption that there was the intention to evade payment of tax; and if the taxable person was able to establish that there was no such intention of evading payment of tax, then Section 129 would not be applicable.

The petitioner contends that in spite of the driver explaining to the 1st respondent that, for operational convenience, the goods that were destined to Adoni were loaded on top for being delivered first, and that the vehicle was rightly proceeding towards Adoni, that he was a resident of Hyderabad and after delivering the goods at Adoni, he would then come back to Hyderabad, the 1st respondent did not consider his explanation and detained the vehicle.

Brief Arguments by Respondents:

He contended that to go to Adoni, Andhra Pradesh, the conveyance has to first pass Hyderabad, Telangana, and the goods destined to the petitioner in Hyderabad should be delivered to the petitioner first, and then only the goods vehicle/ conveyance should have proceeded to Adoni subsequently for delivery; but the vehicle was carrying the goods of both the Hyderabad recipient (being the petitioner) and Adoni recipient (being M/s. Simi Steels) at the time of interception.

According to the 1st respondent, as per logic since Hyderabad comes first and not Adoni when the vehicle comes from Dadra and Nagar Haveli, the consignment of 14.30 tonnes would be offloaded at Hyderabad, and then 2.01 tonnes consignment should proceed towards Adoni; and the vehicle was therefore rightly detained by him when it was more than 100 kms from Hyderabad and carrying the full load of 16.31 tonnes.

According to him, the load meant to the petitioner at Hyderabad was not offloaded and thereby it looked as if the said goods were also meant for another destination, that this is malpractice and violation of e-way bill rules and so the vehicle was detained rightly.

Judgement/ Ratio (in brief):

19. We do not appreciate the stand taken by the 1st respondent for the reason that the quantity consigned to the petitioner at Hyderabad was admittedly 14.30 tonnes and the quantity which was consigned to M/s. Simi Steels, Adoni was only 2.01 tonnes. Naturally for operational convenience the transporter would load the lesser quantity last and the larger quantity first, i.e. the larger quantity would then be at the bottom of the goods vehicle and the smaller quantity would be on top of it; and it would be convenient for the transporter to offload the lesser quantity first and then the larger quantity next.

20. If the contention of the 1st respondent is to be accepted, for delivery of 14.30 tonnes at Hyderabad to the petitioner first, the transporter would have to offload even the 2.01 tonnes which are on top of the consignment of 14.30 tonnes in the goods vehicle, and then reload it in Hyderabad, which would be a cumbersome process.

21. This fundamental issue the 1st respondent shockingly did not understand and simply went by the point that Hyderabad comes first and Adoni comes later ignoring the operational convenience of the transporter.

22. It is also not the case of the 1st respondent that there was any discrepancy in the total quantity of the load, as admittedly the total load on the vehicle corresponded to the quantity mentioned in the e-waybills and invoices. Therefore, no such conclusion could even be prima facie drawn by the 1st respondent that the load of 14.30 tonnes which were meant to the petitioner at Hyderabad would be offloaded at another destination.

23. We do not accept the plea of the 1st respondent that even if the goods meant to be delivered at Adoni were loaded on top of the conveyance, the said goods should have been unloaded and then reloaded after unloading goods intended for the petitioner at Hyderabad. Such a view, in our opinion, is utterly perverse and cannot be accepted.

24. It is also not the case of the 1st respondent that there is any prohibition for a consignor to load the consignments to two different destinations intended for two different parties in two different States on a single conveyance, and there is any rule that consignments intended for a party at a shorter distance should be offloaded first.

25. In our considered opinion, the 1st respondent had acted mechanically without application of mind to the operational convenience of the transporter.

26. Also for the bonafide action of the transporter, the 1st respondent cannot mulct the petitioner with tax and penalty.

27. The petitioner cannot be said to have any intention to evade tax if any mistake is, for the sake of argument without conceding it, has been committed by the transporter.

28. The finding of the officer, the 1st respondent, in the impugned order that the transaction involving the petitioner was ‘suspicious’ and that the transporter was found ‘without proper documents’ is perverse and cannot be sustained in these circumstances.

29. We are also of the opinion that the collection of the amount of Rs.3,68,555/- towards GST and penalty of Rs.3,68,555/- from the petitioner on 04.01.2021 was by way of economic duress since the petitioner had no choice but to pay it to secure the release of the vehicle and so the petitioner is entitled to refund of the same.

30. Accordingly, the Writ Petition is allowed; the order of detention in Form GST MOV-06 on 29.12.2020 passed under Section 129(3) of the CGST Act, 2017 by the 1st respondent is set aside; it is declared that the action of the 1st respondent in detaining the conveyance of the goods No.AP13X 6980 on 29.12.2020 at Annasagar, Bhoothpur Mandal, Mahabubnagar District and demanding payment of GST and penalty is arbitrary, illegal, and violative of Articles 14 and 300A of the Constitution of India; and the respondents are directed to refund to the petitioner within four (4) weeks the sum of Rs.3,68,555/- towards GST and penalty of Rs.3,68,555/- paid by the petitioner on 04.01.2021 with interest at 6% per annum from 04.01.2021 till the date of payment.

31. Pending miscellaneous petitions, if any, in this Writ Petition shall stand closed. No costs.

Head Note/ Judgement in Brief:

Whether it is mandatory that when a truck is carrying goods of 2 e-Way Bills then it has to unload the goods of shorter distance first and then the goods of longer distance or goods of higher weight first and then goods of lesser weight?

The answer is certainly NO. There is no law/rule which says that the goods to be unloaded at a shorter distance must be offloaded first or the goods of higher weight to be unloaded first. Unless there is something on record to prove that there was Bad Intention or intent to evade tax, such action of detention is bad in law and therefore cannot sustain.