M/S.T.V.H.Express vs The State Tax Officer on 9 January, 2023

Summary of Judgment: M/S.T.V.H.Express vs The State Tax Officer

1. Outcome

The Writ Appeal was dismissed. The High Court upheld the order of the learned Single Judge, thereby declining to interfere with the penalty order in a writ proceeding. The Court directed the appellant (the transporter) to avail the statutory remedy of filing an appeal before the Appellate Authority under the TNGST Act, 2017. The time for filing the appeal was extended by 15 days from the date of receipt of the judgment's copy.

2. Core Issue

The central legal question was whether the High Court should exercise its writ jurisdiction under Article 226 of the Constitution to adjudicate on the correctness and valuation of goods for a penalty imposed under Section 129 of the GST Act, or whether the aggrieved party must be relegated to the statutory appellate remedy, especially when the dispute involves contested questions of fact.

3. Key Facts

• Appellant: M/s. T.V.H. Express, a transporter.
• Incident: On March 4, 2022, the appellant's vehicle was intercepted while transporting 58 bundles of Readymade Hosiery Garments from Tiruppur to Hyderabad.
• Infraction: The goods were being transported without proper documents, specifically invoices, in contravention of Section 68 of the GST Act.
• Department's Action:
  • The vehicle and goods were detained.
  • An order of detention (FORM GST MOV-06) and a show-cause notice (FORM GST MOV-07) were issued under Section 129.
  • The department determined the value of the 58 bundles at ₹11,60,000/- and proposed a penalty of the same amount.
• Appellant's Response:
  • The appellant filed a reply on March 15, 2022, admitting the mistake.
  • However, they disputed the valuation, claiming that only two bundles were worth ₹20,000 each, while the remaining 56 bundles were valued between ₹4,500 and ₹5,000 per bundle.
• Final Order: The State Tax Officer passed an order on March 17, 2022, confirming the penalty of ₹11,60,000, noting that the owner of the goods had not come forward.
• Procedural History: The appellant challenged this order via a Writ Petition, which was dismissed by a Single Judge who directed them to file a statutory appeal. The present case is a Writ Appeal against the Single Judge's order.

4. Arguments

• Appellant's Arguments (Transporter):

  1. As the transporter and not the owner of the goods, the penalty should be levied under Section 129(1)(b) of the GST Act, which is limited to 50% of the value of the goods (where the owner does not come forward).
  2. The penalty imposed, equivalent to 100% of the goods' value, is arbitrary and contrary to the statute.
  3. The requirement to file a statutory appeal is illusory because the pre-deposit amount would be calculated on an arbitrarily high penalty.

• Respondent's Arguments (State Tax Officer):

  1. The Single Judge's order was well-reasoned.
  2. The appellant has an alternate and efficacious remedy of filing a statutory appeal under Section 107 of the GST Act.
  3. The dispute over the value of the goods is a disputed question of fact, which cannot be adjudicated in a writ petition.
  4. The issue is already covered by previous decisions of the High Court.

5. Court’s Reasoning

The Division Bench agreed with the Single Judge and dismissed the appeal based on the following reasoning:

• Disputed Questions of Fact: The primary dispute revolves around the valuation of the seized goods. The appellant claims a lower value, while the department has determined a higher value. This is a factual dispute.
• Scope of Writ Jurisdiction: Writ proceedings under Article 226 are not the appropriate forum for determining disputed questions of fact, which would require evidence and detailed examination.
• Proper Forum is Appellate Authority: The statutory appellate authority under Section 107 is the correct forum to establish facts, including the correct valuation of goods. The appellant must present its evidence there.
• Statutory Pre-deposit: The Court affirmed that if the appellant wishes to pursue the appellate remedy, they must comply with the condition of pre-depositing 25% of the penalty amount as mandated for appeals against orders under Section 129.
• Conclusion on Merits: The Court found no reason to interfere with the department's order at this stage, noting that neither the consignor nor the consignee had come forward to claim the goods or contest the valuation.

6. Statutory References

• Constitution of India: Article 226
• Central Goods and Services Tax Act, 2017 (CGST Act) & Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act):
  • Section 68: Inspection of goods in movement.
  • Section 107: Appeals to Appellate Authority (including the requirement for pre-deposit).
  • Section 129: Detention, seizure, and release of goods and conveyances in transit. Specifically, clauses (1)(a), (1)(b), and (3).
• GST Forms:
  • FORM GST MOV-02 (Order for Physical Verification)
  • FORM GST MOV-04 (Physical Verification Report)
  • FORM GST MOV-06 (Order of Detention)
  • FORM GST MOV-07 (Notice for Penalty)

7. Precedents Cited

The respondent cited the following cases to argue that the legal issue was already settled:
* W.P.No.18753 of 2022
* W.P.No.20794 of 2022
* W.P.No.21690 of 2022