The Allahabad High Court has quashed the detention order as the seizing authority failed to prove tax evasion intention.
The bench of Justice Piyush Agrawal has observed that the seizing authorities have not drawn any sample or got an expert report holding that the goods in question seized were mustard oil and no R.B. Oil as disclosed in the accompanying documents, i.e., e-tax invoice and e-way bill.
The bench held that once the authorities have not observed that there was an intention to evade payment of tax, the proceedings initiated under section 129(3) of the GST Act ought not to have been initiated against the petitioner.
The petitioner/assessee is in the business of manufacturing and selling of edible oils. in the normal course of Its business, the petitioner received order for supply of R.B. Oil from one M/s Shiv Shakti Enterprises, Bihar, which is also a registered firm.
The petitioner issued e-tax invoice and generated e-way bill. The goods were dispatched through a vehicle from Gwalior (MP) to Bihar and to reach Bihar, the vehicle in question has to pass through the State of U.P.
The goods were intercepted at Auraiya by the department and after recording the statement of the driver and physical verification, the department passed the impugned detention order. Thereafter, order under section 129(3) was passed and demand was raised by the respondents.
The petitioner submitted that without issuing notice in MOV – 07, notice as required under section 129(3) of the GST Act and order in MOV -09 for demand of penalty for release of goods, the proceedings were initiated.
The court stated that the authorities have not recorded any finding with regard to intention to evade payment of tax. If there is no such observation or finding that there was an intention to evade payment of tax, the proceedings initiated against the petitioner are vitiated.
The court while allowing the petition held that the authorities below have miserably failed to record a finding against the petitioner that there was an intention to evade payment of tax. Once the authorities have failed to discharge their primary duty, the orders cannot be sustained.
Case Details
Case Title: M/S Shivaji Udhyog Versus Additional Commissioner Grade-2 Appeal-Ii And Another
Case No.: WRIT TAX No. – 1234 of 2024
Date: 09/01/2025
Counsel For Petitioner: Aditya Pandey
Counsel For Respondent: C.S.C.
