1. Heard Sri Nishant Mishra assisted by Sri Vipin Kushwaha, learned counsel for the petitioner and Sri C.B. Tripathi, learned Standing Counsel for the respondents-State.
2. With the consent of learned counsel for the parties, writ petition is finally disposed of without calling the counter affidavit.
3. The instant writ petition has been filed by the petitioner for the following relief;
A. Issue a writ, order or direction in the nature of certiorari quashing the impugned seizure order dated 28.03.2018 and consequential notice dated 28.03.2018. (Annexure-1 & 2) passed by respondent no.3
B. Issue a writ, order or direction in the nature of mandamus commanding Respondent No.3 and his agents, to release the Vehicle No. UP-12AT-1460, without insisting for deposit of any amount of tax/penalty;
C. Issue a writ, order or direction declaring that Notification No.1014 dated 21.07.2017, as amended, is directory and not mandatory, in so far it requires carrying TDF for inter-State transaction covered by IGST Act, 2017;
D. Issue a writ, order or direction quashing the Circular dated 06.02.2018 issued by Respondent no.2;
4. The petitioner is a firm dealing with all kinds of Iron Scrap etc. and is registered under the provision of GST Act, 2017.
5. In normal course of business, the petitioner firm sold M.S. Scrap vide Invoice dated 24.03.2018 for an amount of ₹ 4,14,712/- to M/s Cosmox Ferrours (P) Ltd., Bhagwanpur, District Hardwar, Uttrakhand. The petitioner has prepared a tax invoice against the aforesaid sales being Tax Invoice No.0257 dated 24.03.2018 indicating wherein the taxable value of the goods to the tune of ₹ 3,51,450/- on which Integrated Goods and Service Tax (hereinafter referred as ‘the IGST’) @ 18% has been charged to the tune of ₹ 63,262/-. Since the petitioner’s firm is situated in District Faridabad, State of Haryana, it generated e-way bill prescribed under Central Goods and Service Tax, Rules (hereinafter referred as the ‘CGST’) after uploading of the relevant details of the aforesaid transactions. The said e-way bill has been downloaded from the official portal on 24.03.2018. The said e-way bill indicates the time and the date of generation as 24.03.2018 at 8.38 P.M. giving all requisite details therein. The said goods were booked for transportation from Faridabad to Haridwar through a transporter namely DEV Transporter, Muzaffar Nagar against goods receipt (GR) no. 241 dated 24.03.2018. The aforesaid goods are loaded at Faridabad and transported through truck no. U.P.-12AT-1460.
6. Learned counsel for the petitioner has submitted that when the aforesaid vehicle in question was crossing through Ghaziabad, it was intercepted/detained by the Assistant Commissioner, State/Commercial Tax, Mobile Squad-VIIth Unit, Ghaziabad on 25.03.2018 at about 12.05 P.M. When the petitioner received the information about the detention of his goods and vehicle, the person incharge of the vehicle on instruction immediately downloaded the Transit Declaration Form at 3.13 P.M. and furnished the same before the respondent no.3 on 25.03.2018 itself. The said Transit Declaration Form-I which has been downloaded by the petitioner indicates all the details and it further indicates that the same has been got downloaded at 3.13 P.M. on 25.03.2018.
7. Learned counsel for the petitioner has submitted that though the Transit Declaration Form has been presented in pursuance of the insistence by respondent no.3 but it was not at all required to be furnished under the law.
8. The respondent no.3, however, has passed a seizure order dated 28.03.2018 by which he has seized the goods as well as vehicle on the ground that the goods were being transported from outside the state of U.P. without the Transit Declaration Form, which is in violation of provision of UPGST Act. The respondent no.3, in pursuance to the seizure order, has issued a show cause notice dated 28.03.2018 under Section 129(3) of the UPGST Act directing the petitioner to appear before him on 04.04.2018 and to explain as to why tax @ 18% amounting to ₹ 63,262/- and equivalent amount of penalty may not be imposed.
9. Learned counsel for the petitioner has submitted that there is no requirement for generation or downloading of the Transit Declaration Form-I for the goods crossing/passing through the State of U.P. He has further submitted that since the TDF-I is not required under the law, the seizure of goods and the vehicle on the ground of non availability of TDF-I is wholly illegal and without jurisdiction.
10. It is further submitted that in exercise of power conferred by Rule 138, as originally enacted, State Government issued Notification No.1014 dated 21st July, 2017 specifying the following documents in clause (i) to (iv) to be carried while the goods are in movement or in transit storage-
In case of transportation of taxable goods valuing ₹ 5000/- or more from a place outside Uttar Pradesh into the State.
In case of transportation of taxable goods valuing ₹ 1 lakh or more within Uttar Pradesh or from a place within the State to place outside the State.
In case of transportation of taxable goods by e-commerce operators or by their authorised transporters, courier agents or agents for delivery to a person within Uttar Pradesh
In case of transportation of taxable goods valuing ₹ 5000/- or more from a place outside Uttar Pradesh to a place outside Uttar Pradesh and on exit of goods from the State, the information in Form TDF-02
11. Learned counsel for the petitioner has submitted that a process for initiation of a new indirect taxation regime was put into motion by the Constitution (101st Amendment) Act 2016 dated 8.9.2016 by which Articles 246-A, 269-A, 279-A and other provisions of the Constitution were amended. As per the amended Article 269-A, which pertains to levy and collection of Goods and Services Tax in the course of inter-state trade or commerce such tax shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Service Tax council. Import within the territory of India was included within the meaning of the term “Inter-State Trade or Commerce” and in respect of it tax, as aforesaid, would be levied and collected by the Government of India.
12. In pursuance to the aforesaid 101st Amendment of the Constitution three enactments were passed by the Parliament, i.e. the Integrated Goods and Services Tax Act 2017; the Central Goods and Services Tax Act 2017; the Union Territory Goods and Services Tax Act 2017 (hereinafter referred as ”UTGST Act’). In addition to the aforesaid three enactments, the Legislature of the State of Uttar Pradesh passed an enactment known as the ”UPGST Act, 2017′.
13. In matters of inter-State Trade and Commerce including import into the territory of India and out of it, the IGST Act, 2017 applies, whereas, in matters of intra-State trade and commerce the ”CGST Act 2017′ and the State Goods and Services Tax Acts, which in this case is ”UPGST Act, 2017”, apply.
14. Section 3 of the IGST Act, 2017 provides that the Board may appoint such Central Tax Officers, as it thinks fit, for exercising powers under this Act. There is no dispute about the fact that by virtue of section 4 of the IGST Act, 2017 the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorized to be the proper officers for the purposes of the said Act, subject to such exceptions and conditions as the Government shall, on the recommendations of the Council by notification, specify. Similarly for enforcement of CGST Act 2017 by virtue of section 6 thereof State Authorities under UPGST Act 2017 are also empowered to enforce CGST Act 2017.
15. It is also not in dispute that by virtue of section 20(xv) of the ”IGST Act, 2017′ the provisions of ”CGST Act, 2017′ apply in respect of matters covered by the IGST Act, 2017 on the subject of inspection, search, seizure and arrest. Chapter XIV of the CGST Act, 2017 deals with inspection, search, seizure and arrest. While section 67 of CGST Act, 2017 deals with the power of inspection, search and seizure, section 68 deals with inspection of goods in movement and it is this provision with which we are primarily concerned. It reads as under:
“68. Inspection of goods in movement
(1) The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.
(2) The details of documents required to be carried under sub-section (1) shall be validated in such manner as may be prescribed.
(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.”
16. As would be evident from its reading, the documents which the Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified, are such, as may be prescribed. Now this prescription has been made under Rule 138 of the CGST Rules, 2017 which reads as under:
“138. E-way rule.-Till such time as an E-way bill system is developed and approved by the Council, the Government may, by notification, specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage.”
17. As would be evident from a reading of the aforesaid rule, it refers to an E-way bill System which is to be developed by the GST Council and it provides for an interim arrangement by the Government till an E-way Bill System is so developed and approved. The words “Government” used therein is defined in Section 2(53) of CGST Act, 2017 to mean the “Central Government”. It is not in dispute that on the date of interception of the vehicle in question E-way Bill System had not been developed, therefore, the documents which were required to be carried during movement of any consignment of goods were those which may have been notified by the Central Government under Rule 138 of the CGST Rules, 2017, as, by virtue of Section 20(xv) thereof, it is this rule which is applicable to matters pertaining to IGST Act, 2017. Neither the State of U.P. nor the Government of India has brought on record any such notification which may have been issued prescribing the relevant documents to be carried in the course of such movement as is referred in section 68 of the CGST Act, 2017 and Rule 138 of the CGST Rules, 2017. In fact, learned counsel for the Government of India made a categorical statement on the basis of instructions that T.D.F. Form was not required to be carried for movement of inter-State goods to which the IGST Act, 2017 applies. In fact, as per, learned Advocate appearing for the Government of India, CGST Rules, 2017 were amended on 30th August 2017 and vide another notification dated 29.12.2017 this amendment containing the E-way Bill system was to come into force from 1.2.2018, but, the notification dated 29th December 2017 was rescinded by a subsequent notification dated 2.2.2018. Thereafter the notification dated 7th March 2018 has been issued regarding E-way Bill System.
18. Thus, E-way bill system has been prescribed only recently by a notification of the Government of India dated 7th March, 2018 whereby Rule 138 of the CGST Rules, 2017 has been amended and other Rules have been incorporated in this regard. These amendments are to come into force from a date to be specified by the Central Government which is specified w.e.f. 01.04.2018.
19. Be that as it may, the fact of the matter is that on the date of incident i.e. 24.03.2018 neither there was any E-way Bill System nor any notification by the Central Government under Rule 138 of the CGST Rules, 2017 requiring the carrying of a TDF Form or any other such document in the course of inter-State supply/movement of goods, as such, the very basis for passing the impugned orders and taking action against the petitioner as impugned herein is apparently erroneous and illegal. In view of the above, it cannot be said that there was any intent to evade tax.
20. As regards the contention of Sri C.B. Tripathi, based on the notification issued under Rule 138 of the UPGST Act, 2017, no doubt the said notification also takes into consideration the requirement of carrying documents i.e. TDF Form-1, in respect of inter-State movements of goods, but, in our view it is only the Government of India which is empowered to issue such a notification in respect of inter-State trade under section 20(xv) of the IGST Act 2017 read with Section 68 of the CGST Act, 2017 and Rule 138 of the CGST Rules, 2017 made thereunder, as, the term ”Government’ used in Rule 138 is defined in section 2(53) of the CGST Act, 2017 to mean the ”Central Government’, just as, under section 2(9) of the IGST Act, 2017 ”Government’ means ” the Central Government’. Moreover, with respect to Goods and Service Tax in relation to inter-State Trade the Parliament alone has the authority to legislate as would be evident from the 101st Amendment to the Constitution.
21. In this view of the matter, we are of the considered view that on the relevant date i.e. 24.03.2018, there was no requirement of carrying TDF Form-1 in the case of an inter-State supply of goods. In fact on the relevant date there was no prescription of the documents to be carried in this regard under Rule 138 of the CGST Act, 2017, accordingly, the seizure and penalty imposed upon the petitioners based on the notification dated 21.7.2017 issued under Rule 138 of the UPGST Act 2017, which was not applicable, is clearly illegal.
22. Cross-empowerment under section 4 of IGST Act, 2017 and section 6 of CGST Act, 2017 merely means that State Authorities empowered under the UPGST Act, 2017 can also enforce the provisions of CGST Act, 2017 or IGST Act, 2017, but it does not mean that they can apply the provisions of UPGST Act, 2017 or Rules made thereunder to cases of inter-State trade in violation of section 20(xv) of IGST Act, 2017. It does not mean that the State Government can issue a notification under Rule 138 of UPGST Rules made under UPGST Act 2017 to prescribe documents to be carried in an inter-state supply of goods and services regarding which only the Central Government has the power under section 20(xv) of IGST Act, 2017 read with section 68 of CGST Act 2017 and Rule 138 of CGST Rules 2017.
23. The fact that the authorities under the State Act were empowered to exercise the powers under the CGST Act 2017, assuming it to be so, is in consequential, as, it is not their jurisdiction to exercise power of seizure which is under question, but, the manner in which they have exercised it on the basis of an inapplicable provision of law, as, they have proceeded on the presumption that TDF Form-1 prescribed under a notification issued by the State Government under Rule 138 of the Rules made under the UPGST Act 2017, was required to be carried, which is not the requirement in law. For this very reason, the judgment dated 29.1.2018 passed by a Coordinate Bench of this Court in Writ Tax No.95 of 2018 does not apply to the instant case, as the challenge therein was to the very power of the State Authorities under UPGST Act, 2017 to seize goods involved in inter-state supply. Here the question is whether petitioner was required to carry TDF Form I or not, which we have answered in the negative.
24. As regards the provisions of Section 129 UPGST Act, 2017 under which the impugned action has been taken, the same is not applicable to an inter-State trade or commerce. By virtue of Section 20 of the IGST Act, 2017, it is section 129 of CGST Act, 2017 that would apply, but this is not the ground on which we are invalidating the impugned action, as, if it is traceable to the aforesaid provision of CGST Act, 2017 which is pari materia to the State Act, then mere wrong mentioning of a provision would be too technical a ground for interference. We are invalidating the action on account of absence of any notification by the Central Government under Rule 138 of CGST Rules, 2017 and in view of incorrect application of notification issued by the State Government under Rule 138 of UPGST Rules.
25. We are supported in our view not only by the statement made by Central Government Counsel as recorded hereinabove, but also by the judgment of the Kerala High Court on the subject as reported in ASCICS Trading Company v. Assistant State Tax Officer & anr., 2017 NTN (Vol.65) 145, wherein it has been held as under:
“3. To a pointed query as to the power of the State Government to detain goods for alleged non compliance with the requirement of carrying the prescribed documents under the I.G.S.T. Act, which is the basis for the detention in Ext. P5 notice impugned in the writ petition, the learned Government Pleader would take me through the provisions of the IGST Act, CGST Act and SGST Act and in particular, the provisions of Section 4 and Section 20 of the IGST Act and Section 6 of the CGST Act read with Rule 138 of the CGST Rules as amended by notification No.27/2017 – Central Tax for the purposes of pointing out that, although the power to prescribe the documents that are to accompany the transportation of goods in the course of interstate trade is conferred on the Central Government, the Central Government has, till date, not notified the documents that have to be carried by a transporter of the goods in the course of interstate movement. Under the said circumstances, and finding that neither the State Legislature nor the State Government would have the power to make laws/rules to govern interstate movement of goods in the course of trade, and for the purposes of levy of tax, I am of the view that detention in Ext.P.5, for the sole reason that the transportation was not accompanied by the prescribed documents under the IGST Act/CGST Act/CGST Rules, cannot be legally sustained. I therefore, allow the writ petition by making the interim order absolute.”
26. Furthermore, we find that alongwith the consignment of goods the driver was carrying an invoice which mentioned that the goods were being taken from the State of Haryana to the State of Uttarakhand, therefore, as of now, it was an inter-State trade and there is nothing on record to show otherwise. The assertion that IGST had already been paid, has also not been denied by the opposite parties nor that both the consignor and consignee are registered dealers. Moreover, the requisite details having been mentioned in the invoice etc. the same would be verified at the point of destination and accordingly the matter would be scrutinized as regards the liability of Tax. The notification dated 21.7.2017 issued by the State Government under Rule 138 of the UPGST Rules, 2017 made under Section 164 of the UPGST Act, 2017 was clearly inapplicable for the reasons already mentioned earlier. There was no intent to evade tax.
27. The contention of Sri Nishant Misra, learned counsel for the petitioners was that the transaction was one of inter-State supply of goods, therefore, it was covered by the Integrated Goods and Services Tax Act, 2017 and as per section 20 (xv) thereof, in matters of inspection, search, seizure and arrest, provisions of the Central Goods and Services Tax Act, 2017 were applicable. As per section 68 of the CGST Act, 2017, inter alia, Government may require, the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified, to carry with him such documents and such devices as may be prescribed. This prescription is contained in Rule 138 of the Central Goods and Services Tax Rules, 2017, but, no notification had been issued by the Central Government under the said rule specifying the documents that a person in charge of a conveyance carrying any consignment of goods shall carry while the goods are in movement or in transit storage, therefore, the rule was practically inoperative and there was no requirement of carrying any such document. The invoice and other documents which were being carried were sufficient for the purpose of transportation, especially as, they revealed that it was an inter-State supply of goods and the IGST at the rate of 18% had already been paid.
28. According to learned counsel for the petitioner when Rule 138, as originally enacted, ceases to exist on 01.02.2018, then any document of any kind including the Transit Declaration Form-I specified by the State Government in exercise of power under originally enacted Rule 138 was not required to be generated by a dealer after 1st February, 2018, and therefore, the entire proceedings against the petitioner carried by the respondent no.3 by seizing the goods and vehicle as well as by issuing show cause notice for imposition of penalty is wholly without jurisdiction.
29. According to the counsel for the petitioner, the Commissioner of State Tax has no power to issue the circular in exercise of power under Section 168 of the Act. The Commissioner, therefore, cannot issue circular and directions which are not in consonance with the Act and Rule or the notifications. He has further submitted that the Commissioner is not expected to perform the legislature function and issue the instruction or the circular on something contrary to the provision which are available in the Act or Rule.
30. Learned counsel for the petitioner, therefore, has submitted that the Commissioner by way of circular dated 06.02.2018 usurped the rule making power of the legislature. It is further submitted that the circular issued by the Commissioner cannot revive the notification. In the present case the Notification no. 1014 dated 21.07.2017 which was already amended by another notification No. 1359 dated 20.09.2017 has no legal value. The counsel for the petitioner has challenged the validity of the circular dated 06.02.2018 and has submitted that the same is ultra vires to UPGST Act and Rules 2017.
31. On the contrary, Sri C.B. Tripathi, learned counsel representing the State has submitted that the circular is nothing but a clarification to all subordinate authorities to act by applying the notification No.1014 dated 21.07.2017 though is amended but still is applicable. He has further submitted that the present proceedings are summary, and therefore, the petitioner be relegated to deposit the impugned demand and to participate in the penalty proceedings and in case, if the petitioner succeeded before the seizing authority, the amount if so deposited in compliance of the seizing/penalty order will be refunded.
32. Learned counsel for the State, therefore, submits that in view of the aforesaid reasons the earlier notification No.1014 dated 21.07.2017 automatically revived and the Commissioner has rightly issued the circular dated 06.02.2018 requiring of downloading of TDF-I. He has also submitted that the order of seizure and issuance of the notice under Sections 129(1) and 129(3) respectively are issued with full authority of law by the respondent no.3 and are in accordance with law.
33. We find no substance in the submission of learned counsel for the State.
34. We noticed that the notification dated 21.07.2017 has already been amended by the notification No. 1359 dated 20.09.2017 and on account of aforesaid amendment, the UPGST (4th Amendment) Rules, 2017 was introduced and made effective with effect from 01.02.2018 vide notification No.138 dated 30.01.2018, therefore, in our opinion, the initial notification no.1014 by which e-way bill-01, e-way bill-02, e-way bill-03 and TDF (Transit Declaration Form) was introduced stands rescinded.
35. We are in agreement with the submission of learned counsel for the petitioner that with effect from 01.02.2018 there was no requirement to download the Transit Declaration Form-I as the same was not required under the law after the aforesaid cut of date.
36. There is no doubt with regard to transaction in question as we find that the Integrated Goods and Service Tax (IGST) has been charged by the petitioner in its invoice and when the IGST is required to be paid then there cannot be any intention to evade the payment tax namely SGST and CGST.
37. In view of the aforesaid, the impugned seizure order dated 28.03.2018 passed by the respondent no.3 and the consequential notice dated 28.03.2018 issued under Section 129(3) of the Act are hereby set aside. The goods and the vehicle be released forthwith and we further direct the respondent authorities to return the amount, if any, paid by the petitioner or his Agent in pursuance of seizure proceedings.
38. The writ petition stands allowed.