Proceedings U/S 129 Of GST Act Are Summary Proceedings, Burden To Prove Actual Movement Of Goods Lies On Assesee: Allahabad High Court
The Allahabad High Court has held that proceedings under section 129 of the GST Act are summary proceedings where the burden to prove the actual physical movement of goods is on the assesee transporting the goods. It further held that authorities have the power to seize goods on grounds of undervaluation.
Justice Piyush Agrawal held, “Under the taxing statute, in the original proceeding or in the summary proceeding, the primary burden is to be discharged by the assessee by bringing on record the cogent material. The burden of proof is shifting to the department only in the re-assessment proceeding or subsequent proceeding not being the original proceeding. In other words, the assessee in the original proceeding is duty bound to bring the material on record in support of its claim but in the subsequent proceeding i.e. re-assessment proceedings, the burden shifts on the revenue.”
Factual Background
According to the petitioner, it is in the trade of pan masala and scented tobacco. The petitioner received an order for the supply of goods to Delhi. Since the value of the goods was allegedly lower than the prescribed limit, the petitioner did not generate the e-way bill and the goods were allegedly set out from West Bengal/ Assam towards Delhi with tax invoices 41 to 45 dated 15.9.2021.
The goods were intercepted in Kanpur, and a show cause notice was issued to the petitioner. In its reply, the petitioner stated that since the value of goods was below Rs. 50,000, e-way bill was not necessary and a crossing challan was already accompanying the goods. It was stated that the detaining / seizing authority did not have the jurisdiction to detain the goods on grounds of undervaluation.
The authority passed a penalty order which was challenged by the petitioner in appeal which was dismissed, allegedly without consideration of material on record.
Challenging the order of the Appellate Authority, the petitioner pleaded that the goods could not have been detained on grounds of undervaluation in proceedings under Section 129 of the GST Act.
Per contra, counsel for respondents argued that there was intention to evade tax as the goods were not accompanied by genuine documents. It was submitted that though movement of goods was shown from West Bengal/ Assam to Delhi, according to the driver, the goods were loaded at Kanpur. It was argued that the petitioner had not produced any document to show that goods were being transported from West Bengal/ Assam.
High Court Verdict
The Court observed that the petitioner had never rebutted the statement by the driver where he stated that goods were loaded at Kanpur and the petitioner had failed to prove the movement of goods from West Bengal/ Assam towards Delhi by not producing any toll receipts, etc. it was further observed that the goods were manufactured in Kanpur.
“For claiming the genuineness of the document, the petitioner was duty bound to spell out the detail of mode of transport as well as details of vehicle used for transportation of the goods in question up to Kanpur. In the absence of any detail being furnished by the petitioner, the proceedings cannot be said to be illegal.”
The Court further observed that the petitioner had not rebutted the facts recorded by the authority which were against it and had not taken any ground in the appeal to show actual movement of goods was from West Bengal/ Assam. It was held that the burden to prove the actual movement of goods from West Bengal/ Assam to Delhi was on the assesee in summary proceedings, which it had failed to discharge.
The Court relied on State of Karnataka Vs. M/s Ecom Gill Coffee Trading Pvt. Ltd., where the Supreme Court had held that burden to prove actual physical movement of goods was on the assesee. It had held that the person claiming the exemption has to prove the genuineness of the transaction.
In M/s Shiv Trading Vs. State of UP and others, the Allahabad High Court had also held that the actual physical movement of goods has to be proved by the assesee. This judgment of the Allahabad High Court has been confirmed by the Apex Court.
Observing that the petitioner had failed to establish the movement of goods from West Bengal / Assam, the Court held that
“It is a glaring example of organized tax evasion. The petitioner has failed to bring on record any material to show actual movement of the goods from West Bengal / Assam. The details of truck number or toll receipt crossed during its journey from West Bengal / Assam to Kanpur have not been filed at any stage.”
The Court held that since the petitioner had failed to show any receipts to prove movement of goods from West Bengal / Assam, the statement of the driver is to be given more “sanctity”.
It was also observed that though the petitioner had challenged the impugned order on grounds that the authority did not have the jurisdiction to determine the value of goods, the penalty and detention orders were passed on other grounds as well, which were not rebutted by the petitioner.
The Court observed that proceedings under Section 129 can be initiated when goods are being transported in contravention with provisions of the GST Act and rules made thereunder. Section 31 of the Act provides for issuance of tax invoices where description, quantity and value of goods, the tax charged thereon have to be mentioned. Rule 46 (j) and (k) of GST Rules prescribes the particulars to be mentioned in the tax invoice including total value of supply of goods and taxable value of supply of goods.
“On bare reading of said Sections as well as the Rules, it clearly shows that the intent of the legislature is that the registered dealer shall furnish the true and correct value of the goods on the tax invoice. But failing to declare the true value of the goods would result in the document being held not be to proper in the context of valuation. The legislature has conferred the power of seizure of goods, if the goods in transit are in contravention of the provisions of Act as well as the Rules framed thereunder,” held Justice Agrawal.
The Court held that the assesee had deliberately undervalued goods with the intention to avoid generating e-way bill under Rule 138 of the GST Rules.
The Court relied on M/s Shiv Shakti Trading Company Vs. State of UP and others, a division bench of the Allahabad High Court had upheld seizure of goods being made on the ground of under valuation and held that it was mandatory for the assesee transporting the goods to declare the true value of goods. It was held that the in case of failure to declare the true value of goods, the goods could be seized by the authority.
Accordingly, the writ petition was dismissed.
Case Title: M/S Jaya Traders Through Its Proprietor Mr. Vishwanath Tiwari v. Additional Commissioner Grade-2 And Another [WRIT TAX No. - 1022 of 2021]