20.07.2022: Mismatch of vehicle number in case of stock transfer does not give rise to illegality in transport of goods – Eway Bill – Section 129 – Telangana High Court

The Hon’ble High Court of Telangana vide its order dated 04.07.2022 in the matter of Symed Labs Limited Vs. Joint Commissioner of ST and 2 Others in W.P. No. 26929 of 2022, set aside the impugned order, where proceedings were initiated against the petitioner under Section 129 for mismatch in vehicle number, and remanded the matter back to the first appellate authority with the directions to decide the same in accordance with law and settled position on the issue involved.

The Petitioner filed the present writ petition challenging the order dated 31.01.2022 passed by the respondents, whereby the appeal filed by the petitioner was dismissed.

Facts: –

  • The Petitioner is registered with Goods and Service Tax (GST) authorities in the State of Telangana and was transporting a pharma drug called ‘pregabalin’ in bulk quantity from one of their units in Medchal to another unit in Nalgonda District by way of stock transfer under e-way bill dated  25.11.2020.
  • However, the said vehicle was intercepted by the Deputy State Tax Officer, Jeedimetla Circle (Respondent No. 2/Proper officer) on 25.11.2020 at 11.45 a.m. and the vehicle was detained due to mismatch in registration number of the vehicle and vehicle number mentioned in the e-way bill as well as the statement of the driver was found unsatisfactory.
  • Thereafter the proper officer passed an order dated 26.11.2020 levying GST of Rs. 9.19,626/- along with equivalent penalty under Section 129(3) of CGST/Telangana GST Act, 2017.
  • Aggrieved of the said order, petitioner preferred an appeal before the Respondent No. 1. The appeal of the petitioner was dismissed on 31.01.2022 with a finding that there is gross mismatch of vehicle number and Circular dated 14.09.2018 issued by CBIC does not cover the present situation in the case.

Held: –

  • The Hon’ble High Court considering the submissions made, facts of the case and law applicable, took note of the impugned order dismissing the appeal of the petitioner, wherein it was held that: –

  ‘……..There could be situations where the same way bill with same vehicle number may be used to transport multiple consignments in different vehicles without paying tax. It is for the tax payer to come clean with convincing explanation. In this case I do not find such  convincing explanation coming from the Appellate Company.

With regard to the contention that penalty of Rs.50,000/- is sufficient under Section 125, it should be noted that the mistake of gross mismatch of vehicle number in this case is not a minor mistake. Hence Section 125 is not applicable. With regard to the circular instructions of CBIC in Circular number 64/38/2018-GST, dt.14.09.2018

It can be seen that gross mismatch of vehicle number is not a situation listed in the circular. With regard to the case of Bhushan Power & Steel Limited cited by the Appellate Company, it should be noted that the said case related to filling up of Part-B of e-way bill and not mismatch of vehicle numbers. Hence it cannot be applied here………………….’ 

  • The Hon’ble Court considering the submission advanced on the behalf of the petitioner that ‘there can be no levy of GST on stock transfer’, referred to the decision of the Coordinate Bench in Same Deutzfhr India P. Ltd. Vs. State of Telangana – 2020 (43) GSTL 673 (Telangana), wherein it was held that ‘There was no occasion for the 3rd respondent to collect tax and penalty from the petitioner on the pretext that there is illegality in the transport of goods as it would merely amount to stock transfer and there is no element of sale of goods or services in it.’
  • Thereafter, the Hon’ble Court considering the findings of impugned order and the decision of the Coordinate Bench in Same Deutzfhr India P. Ltd. Vs. State of Telangana – 2020 (43) GSTL 673 (Telangana), set aside the impugned order dated 31.01.2022 and remanded the matter back to the Respondent No. 1 for reconsidering the order 31.01.2022 and pass a fresh order, after providing hearing to both sides, in accordance with law and in the light of the said decision of the Coordinate Bench.

The Hon’ble Court with the above findings disposed of the Writ petition.

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