Service of notice on driver is not sufficient

Case Covered:

BANSAL EARTHMOVERS PVT. LTD.

VERSUS

ASSISTANT COMMISSIONER STATE GOODS & SERVICE TAX & ORS.

Read the full text of the case here.

Facts of the case:

The above order was passed by the Assistant Commissioner of State Tax, Goods and Services Tax Department of Commercial Taxes, West Bengal, Siliguri Range, Siliguri. The relevant facts leading to the present litigation are enumerated below:

a. The petitioner is a company trading in heavy machinery. In the course of its business, the petitioner had bought one Soil Compactor machine from M/s. JCB India Limited, Maharashtra for the purpose of selling the same in the local market pursuant to an order placed by M/s. Akash Enterprise.

b. As per the petitioner, the machinery was sold to M/s. Akash Enterprise upon raising valid sale documents as required under the CGST Act, 2017 and the corresponding State Act. The sale invoice and the delivery challan were raised and the insurance policy in favour of the buyer had also been taken out. On March 23, 2019, the petitioner dispatched the goods to the destination at Banarhat, Jalpaiguri from the premises of the petitioner company at Sabari. The vehicle was loaded with the goods and was accompanied by the relevant sale documents and the insurance policy documents. However, as per the petitioner, the waybill could not be generated as the server of the GST Portal remained continuously non-functional.

c. According to the petitioner the vehicle had left the premises of the petitioner at 4.15 p.m. and the waybill was generated at 5.10 p.m. In the meantime, the vehicle had been intercepted at Phool Bari and because of the lack of the waybill, the vehicle was detained by the relevant authorities. It is to be noted that the statement (Form GST MOV – 01) of the driver of the vehicle was recorded at 5.00 p.m. on March 23, 2019, and the vehicle was inspected on the same day at 5.00 p.m. (Form GST MOV – 02). Subsequently, an order of detention under Section 129(1) of the WBGST Act, 2017 read with the CGST Act, 2017 was passed on March 25, 2019, on the ground that no waybill was tendered for the goods that were in movement. Initially, the writ petition had been filed on April 03, 2019, challenging the detention by the relevant authorities.

d. When the matter was moved on April 05, 2019, the same was adjourned as the Additional Government Pleader sought time to take instructions. Subsequently, the goods were released subject to furnishing of bank guarantee by an order of a coordinate bench of this Court dated April 16, 2019. On April 16, 2019, the respondent authorities also informed the Court that the final order had been passed in the matter. According to the petitioner, the petitioner was not aware of the date of passing of the order and had no intimation of any hearing with regard to the same.

e. Subsequently, on April 08, 2019, a copy of the order dated April 03, 2019, was handed over to the petitioner demanding a sum of ₹ 4,22,890/- along with a penalty of ₹ 4,22,890/. The events that have taken place subsequent to the initial filing of the writ petition have been brought on record by the petitioner by way of a supplementary affidavit. It is to be noted that affidavit in opposition has also been used by the respondent authorities and the reply thereto given by the petitioner. 

Observations of the court:

In the present case, the goods have already been released upon furnishing a bank guarantee as directed by an order dated April 16, 2019 of a Coordinate Bench. Furthermore, it has been submitted by the petitioner that the tax liability ascertained by the officials has also been paid. What remains is only the penalty that is required to be paid under the Act. As discussed above, the notice required to be served under Section 129 (3) has not been served properly. Accordingly, there has been a clear violation of the principles of natural justice, and therefore,I quash and set aside the impugned order dated April 03, 2019, and direct the Assistant Commissioner of State Tax, Goods and Services Tax to issue a fresh notice upon the petitioner, and thereafter, grant an opportunity of hearing and pass a reasoned order. It is made clear that notice for hearing should be given seven days in advance and the petitioner should not seek any adjournment on the date of hearing.

I make it clear that as the matter has been remitted to the concerned officer for a reasoned decision, I have not gone into the aspect of mens rea at this stage. The arguments with relation to the requirement of mens rea under Section 129 of the WBGST Act, 2017 and the burden of proof and/ or rebuttal of the presumption of guilt is left open to be decided by the concerned officer.

With these observations, W.P.A. 82 of 2019 is disposed of.

There will be no order as to costs.

Urgent photostat certified copy of this order, if applied for, be given to the parties upon compliance of all necessary formalities.

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