21/03/2022
GST CASE LAW 31/21-22 HC: Negligible Quantity Mismatch in Invoice & E-Way Bill not an intention to evade tax
Raghav Metals vs. State of Haryana and Ors.
Facts:
1. Assessee is engaged in business of copper wires and copper scraps, which are purchased from the dealers located throughout the country.
2. Assessee claimed that in the ordinary course of business, it sold copper scraps to M/s R.N.T. Metals Pvt. Ltd., Bhiwadi (Rajasthan) for an amount of Rs.83,69,594/- (including IGST @ 18%).
3. While the goods were in transit, the same were intercepted, however, even after presenting valid Invoice and e-way bill, the vehicle carrying goods was ordered to be stationed and Form GST MOV-02 was issued.
4. On the same day, order of detention of goods under Section 129(1) of the Act in Form GST MOV-06 was issued.
5. Further, notice in Form GST MOV-07 was issued to the Assessee under Section 129 (3) of the Act.
6. Revenue pointed out that on physical verification discrepancy was found in the actual quantity and the quantity shown in Invoice and e-way bill thus, by showing lesser quantity the Assessee intended to evade tax.
Summary:
1. Mismatch in quantity as per invoice and e-way bill cannot be termed as contravention of provisions of CGST Act
2. No intention to evade tax nor mismatch in the quantities is of such nature which shall entail proceedings u/s 129 of CGST Act, 2017;
3. Same issue is well settled by this Court in the matter of Shiv Enterprises; n respect of Revenue’s contention that on physical verification, discrepancy was found in the actual quantity and the quantity shown in Invoice and e-way bill,
4. HC observes that, actual quantity was found to be 90 kgs. 700 gms. more than what has been found as per Invoice; Mentioning that said difference in weight was less than 1% and the alleged evasion, as per State, shall not be more than Rs. 11,000/-,
5. A person, who had already paid a tax of Rs.12.76 lacs on a consignment cannot be said to have an intent to evade tax amounting to Rs. 11000/-
6. HC as regards the issue with respect to bogus ITC claim on the purchase determined that the same was well settled by this Court in the matter of Shiv Enterprises vs. State of Punjab and others [TS Citation] wherein it was held that “The opinion formed by the authorities must reflect such nexus before proceeding under Section 130 of 2017 Act. A trader cannot be accused of having intention to evade payment of tax for act or omission on part of a person not immediately linked to his activity.” and that it is virtually impossible for a trader to ascertain as to whether input tax has been paid by his predecessors or not and it is for this reason also that the claim to ITC has been made subject to scrutiny and assessment.
7. In respect of the Revenue’s contention that on physical verification discrepancy was found in the actual quantity and the quantity shown in Invoice and e-way bill, HC perused the e-Invoice, and observed that quantity of consigned goods was shown to be 10430.7 kilograms, whereas as per the State, it was 10520 kilograms, and opined that the said difference in weight was less than 1% and the alleged evasion, as per State, shall not be more than Rs.11000/-.
8. HC therefore held that it cannot be said that the Assessee had any intention to evade tax or the mismatch in the quantities is of such nature which shall entail proceedings under Section 129 of the Act.
9. HC explicated that a person, who had already paid a tax of Rs.12,76,717.68/- on a consignment cannot be said to have an intent to evade tax amounting to Rs.11000/-.
10. HC allowed the writ, and held that the mismatch cannot be termed as contravention of the provisions of the CGST Act thus, quashed the proceedings against the taxpayer u/s 129 of the Act.
11. HC directed Revenue to refund the fine and penalty if imposed, against the Assessee within a period of 15 days and stated that as goods stood released, no further order was required.
Disclaimer: Update is meant for information purpose only and does not purport to be advice or opinion. It is prepared based on the understanding of the provisions as applicable as on date. The author is not responsible for any error or omission or for any action taken based on its contents.
Source: Taxsutra
