Quashed the detention order passed by non-jurisdictional authority

The Hon'ble Madras High Court in M/S Macmet Engineering Limited v. State Tax Officer (Intelligence) [W.P. Nos.19395 to 19399 of 2022 and W.P.M Nos. 14157 & 14159, 14158 & 14161, 14163 & 14167, 14160 & 14162, and 14164 & 14166 of 2022 dated September 1, 2022] quashed the detention orders passed by the non-jurisdictional authority i.e., Roving squad and directed the assessee to forward all the documents to the concerned jurisdictional assessing officer, who shall take up the issue and decide the same. 

Facts

M/S Macmet Engineering Limited ("the Petitioner") is engaged in the supply of bulk materials transporting/handling systems. ITD Cementation India Limited ("ITDC")entered into a back-to-back EPC contract with the Petitioner. Accordingly, the Petitioner placed a purchase order with M/s. Phoenix Conveyor Belt India Private Limited, West Bengal, for the supply of steel cord pipe conveyor belts and splicing kits to be supplied to ITDC directly. 

A Show Cause Notice dated August 4, 2022 ("the SCN") was issued alleging that the vehicles carried consignments under the 'Bill to – Ship to' concept, but the drivers did not have invoices to support transport to 'Bill to' address in Tamil Nadu. The State Tax Officer, Intelligence Additional, Roving Squad ("theRespondent") also imposed a penalty as the ‘Bill to' address mentioned the name of the Petitioner instead of ITDC.  Five vehicles were detained by the Respondent vide the order dated August 11, 2022, ("the Impugned Order")  under Section 68(3) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") read with Section 129(1) of the CGST Act and Section 20 of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act").

Therefore, a writ petition was filed by the Petitioner to quash the Impugned Order contending that no evasion of tax neither by M/s. Phoenix Conveyor Belt India Private Limited nor by the Petitioner was there and the mistakes were rectifiable in nature and further, Respondent is not the jurisdictional officer to pass Impugned order.

Issue

Whether the Respondent is the jurisdictional officer to pass Impugned order?

Held

The Hon'ble High Court of Madras in W.P. No. 19395 to 19399 of 2022 and W.P.M Nos. 14157 & 14159, 14158 & 14161, 14163 & 14167, 14160 & 14162 and 14164 & 14166 of 2022 dated September 1, 2022 held as under:

• Noted that as per the Circular No. 10/2019 dated May 31, 2019 (Chennai) stated that the Intelligence/Roving Squad detained the vehicles and thereafter, all the records to be handed over to the Jurisdictional Officer or to the Review Cell and thereafter, it is for the Jurisdictional Officer to pass orders on the point of classification and valuation.
• Further, observed that the Petitioner already updated the particulars on the GST Portal even before the detention. 
• Accordingly, quashed the Impugned order and directed the Petitioner to produce all the documents to the jurisdictional assessing officer, give his explanation and it is for the jurisdictional officer to see whether the triangular transaction 'Bill to', 'Ship to' is complete and thereafter, decide the case on its own merits and passes appropriate orders.
• Further, to safeguard the revenue, directed the Petitioner is to execute a bond for the demand and penalty raised. 
• Disposed off the writ petition.

Relevant Provisions

Section 68 of the CGST Act

"Inspection of goods in movement.

68. (3) Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said conveyance to produce the documents prescribed under the said sub-section and devices for verification, and the said person shall be liable to produce the documents and devices and also allow the inspection of goods.
Section 129(1) of the CGST Act:

"Detention, seizure and release of goods and conveyances in transit

129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,––

(a) on payment of penalty equal to two hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such penalty;

(b) on payment of penalty equal to fifty percent of the value of the goods or two hundred per cent. of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to five percent of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such 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."