Imposition of tax and penalty based on route deviation for reaching the destination of goods, is unjustified
Facts of the Case:- The truck was carrying steel coils and plates from Mumbai to be delivered at separate destinations in Kalasipalya, S.P. Road, and Peenya Industrial Area in Bengaluru. However, on reaching Hebbal junction, instead of taking right turn, the driver wrongly took left turn and moved towards Bommasandra Industrial area. The truck was intercepted by the department’s checking squad near Bommasandra. Authorities treated this as unauthorized transportation and diversion of goods, justifying tax and penalty.
However, the respondent's appeal (i.e. taxpayer) filed Writ Petition vide WRIT PETITION NO. 7726 OF 2022 (T-RES) dated 23.06.2022, which was passed in favour of respondent. Therein, it was held that ” Admittedly, the driver of the vehicle was carrying required E-way bills and tax invoices to deliver goods to Peenya Industrial area, Kalasipalyam and S.P.Road. The driver instead of taking a right turn at Hebbal junction and move towards Peenya Industrial area, he has taken a left turn and has moved towards Bommasandra Industrial area. The incident has happened at late night. Given the facts and circumstances of the case, there may be chances of diversion that might have taken place due to human error and it cannot be definitely concluded that diversion was deliberate more so when the driver of the vehicle has filed an affidavit explaining the reasons and the intended purchasers have also confirmed that they were supposed to receive the said goods. It is a fit case to set aside the impugned order passed under Section 107(11) of the KGST Act, 2017 and the CGST Act, 2017 and consequently, the impugned order passed under Section 129(3) of the CGST Act, 2017″.
Department Contention (i.e. Appellant):- The carrier of the subject goods furnished movement particulars of the vehicle in advance. Goods originated from Mumbai and were to be delivered within Bengaluru city limits.
Later, though the department found all the documents in order, it treated the change of route by the driver as “transportation of goods without documents beyond the place of destination and also diversion of the goods to a place other than the destination point” as per the provisions of the GST Act, and imposed the penalty.
The department stated that it was neither convinced with the explanation given by the driver nor the affidavit filed by the purchasers to whom the consignment had to be delivered.
Held that:- The Court stated that no specific law or ruling mandates adherence to a particular route, allowing merchants to choose their route, provided the destination remains intact. While the right to movement and trade is constitutionally guaranteed, it is not absolute and can be regulated by law. Authorities' orders based on the deviation from the specified route lack legal backing. Further, absence of a binding rule prohibiting route alteration, the respondent’s choice of a circuitous route does not warrant penal action.
Cited judgment of Division Bench of the Gujarat High Court in M/S. Karnataka Traders vs. State of Gujarat, highlighting that mechanical detention based on route deviation without substantive evidence of intent to evade tax is not justified.
The Court stated that “What is required by law is furnishing of consignment documents and specified particulars of consignor, consignee, goods, route maps, and destinations. Requirement of furnishing particulars of route map etc. is one thing, compulsive adherence to the route is another. There is law with regard to the former, it is true; but latter is non liquet i.e., an area where there is no binding rule.
The Bench dismissed an appeal filed by the department against the single judge’s verdict. The Court in favour of respondents (i.e. the taxpayer) quashing the obligation to pay tax and penalty and directing the release of the vehicle in question.
To read the Complete judgment 2024 Taxo.online 1302
