Kerala High Court: A.K. Jayasankaran Nambiar, J., while holding the detention of goods valid as per Section 129(1)(b) read with Section 129(3) of the GST Act, discussed the requisites of interstate transactions under the GST Act.
Brief Facts
Facts of the case are enumerated hereunder;
- That the petitioner, who is a purchaser of turmeric from an agriculturist in Karnataka, has approached against detention of a consignment in transit.
- That it is the case of the petitioner that, the consignment was being transported under cover of an invoice generated by the petitioner in his capacity as purchaser of the goods, which showed the goods as attracting tax on reverse charge basis, and an e-way bill which reflected that the consignment was, as such, exempted from tax.
- That the vehicle and the goods were detained, and notice in FORM GST MOV-7 was issued to the petitioner wherein the objection was essentially with regard to the non-registration of the person making the interstate supply, as also the fact that the purchase bill issued by the petitioner was not a valid document for the purposes of supporting an interstate taxable supply.
- That it is the aforementioned detention order that the petitioner has moved against, relying on provisions contended herein.
Contentions
The petitioner contends that, while the consignor agriculturist is not required to take any registration in view of the express provisions of Section 23(1)(b) of the Act, he is also not required to take compulsory registration under Section 24, since the non-obstante clause in Section 24 does not apply to agriculturists mentioned under Section 23. It is his further case that while the e-way bill clearly indicated that the goods were exempted goods, being turmeric bulbs and turmeric, even if the respondents have a case that the goods have been wrongly classified, the same cannot be a reason for detaining the goods under Section 129.
The Government Pleader submitted that the goods on verification were found to not answer the description of exempted goods under HSN Code 910 (for which the consignment was allegedly booked). Further, the consignment was not accompanied by a delivery challan that is required to accompany any consignment of exempted goods sold by an unregistered person.
Observations
The Court observed, “… non-registration of the consignor, or the alleged misclassification of the goods under transportation, cannot be a ground for detention under Section 129 of the GST Act.” However, “the consignor being an unregistered person, and the goods supplied by him to the petitioner being exempted goods, the transportation had to be covered not only by an e-way bill but also by a delivery challan, and since the transportation was not covered by a delivery challan, the respondents were justified in detaining the consignment.”
The Court deciding upon the liability of the petitioner under Section 129(1)(b) of the Act, said, “(…) the petitioner would have to pay the lesser of an amount equal to 5% of the value of the goods or Rs 25000. In the instant case, the value of the goods being approximately 1000000, the lesser amount would be Rs 25000 which amount the petitioner would necessarily have to pay to obtain a release of the goods and the vehicle.”
Decision
Disposing off the present petition, the Court directed the respondents to release the goods and the vehicle to the petitioner on payment of Rs 25000 by the petitioner, as required in terms of Section 129(1)(b) read with Section 129(3) of the GST Act.[Mohammed Shereef v. State of Kerala, WP (C) No. 23397 of 2020, decided on 02-11-2020]
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