Calcutta High Court (Appellete Side)
Sandip Kumar Pandey & Anr vs The Assistant Commissioner Of State Tax on 7 August, 2025
Author: T.S. Sivagnanam
Bench: T.S. Sivagnanam
Form No. J.(2)
Item No.2
Pallab/KS AR(Ct.)
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
HEARD ON: 07.08.2025
DELIVERED ON: 07.08.2025
CORAM:
THE HON'BLE CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)
M.A.T. 1088 of 2025
With
I.A. No. CAN 1 of 2025
Sandip Kumar Pandey & Anr.
Vs.
The Assistant Commissioner of State Tax
Bureau of Investigation (South Bengal) Durgapur Zone & Ors.
Appearance:-
Mr. Pranit Bag
Mrs. Rita Mukherjee
Mr. Ghanashyam Jha
Mr. Rowsan Kr. Jha
..........For the Appellants
Mr. Amitabrata Roy, Ld. G.P.
Mr. Nilotpal Chatterjee
Mr. Tanoy Chakraborty
Mr. Saptak Sanyal
...........For the State
(Judgment of the Court was delivered by T.S. SIVAGNANAM, C.J.)
1. This intra-Court appeal by the appellants/writ petitioners is directed
against the order dated 7th May, 2025 in W.P.A. 9544 of 2025. The
appellants had filed the writ petition challenging an order passed under
Section 129(3) of the Central Goods and Services Tax Act, 2017 read with
the relevant provisions of the West Bengal Goods and Services Tax Act,
2017 (hereinafter referred to as "the Act") dated 3rd October, 2024 by which
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penalty has been imposed on the appellants/writ petitioners under Section
129 (1) (b) of the Act.
2. The learned Single Bench declined to interfere with the order and rendered
certain findings on the merits of the matter but, however, since there was
an appellate remedy provided under the Act, relegated the
appellants/petitioners to avail such remedy. Aggrieved by the same, the
appellants are before this Court by way of this intra-Court appeal.
3. We have elaborately heard the learned counsel appearing for the parties.
4. The following facts are not in dispute. The appellant No.1 had purchased
readymade garments from M/s. Ghosh Enterprises for which a tax invoice
dated 30th July, 2024 was raised by the vendor and the goods were to be
shipped to New Delhi and the writ petitioner No.1 is the proprietor of
Shyam Enterprises. The description of the goods have been mentioned in
the tax invoice alongwith a HSN/SAC Code, quantity, number of pieces, the
price per piece and the total amount payable including 5% IGST and the
Grand Total being Rs.30,25,260/-.
5. The vehicle, which was carrying the goods bearing registration No.HR 38AB
7042 was intercepted by the Assistant Commissioner of W.B.G.S.T. on 21st
July, 2024 at 10.00 hours at Kalla More, NH - 2. The reasons set out in
Form GST MOV - 02 is with a view to verify the genuineness of the goods in
transit, its quantity etc. and/or tendered documents, physical verification
of the goods were carried out and the report was generated in Form GST
MOV-04 dated 23rd July, 2024 and there appears to have been no
discrepancy in the description of the goods, as found in the tax invoice.
Show-cause notice was issued in Form GST DRC - 01 dated 26th July,
2024 alleging that a spot verification was done by the State Tax Officer,
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Bureau of Investigation at the declared place of business of M/s. Ghosh
Enterprises and it appears that Mr. Siddhartha Ghosh, the proprietor of
M/s. Ghosh Enterprises had stated that he does not run any business
under any GSTIN number and the registration certificate has not been
obtained by him and the registration certificate has been fraudulently
obtained by misusing his identity proof. Based on these allegations, which
remained uncorroborated, the authority viz. the Assistant Commissioner
came to the conclusion that the tax invoice furnished by the
appellants/writ petitioners is fake as well as the way bill generated using
the details in the tax invoice cannot be considered to be proper supporting
document and hence, stands rejected and the case is liable to be disposed
of in accordance with Section 129(1)(b) of the Act. Copy of the detailed
notice was also appended to the said form. The appellants/writ petitioners
appears to have not filed their reply to the show-cause notice but, however,
when hearing notice dated 25th September, 2024 was issued, they filed a
reply dated 27th September, 2024 contending that they had purchased the
goods under the said tax invoice and generated the e-way bill and the same
documents were submitted at the time when the vehicle was intercepted
and the tax invoice, e-way bill and consignment note shows the details of
the procurement of goods and that the appellants/writ petitioners are the
owners of the goods.
6. Further, the appellants/writ petitioners stated that the payment details
cannot be provided immediately because the payment in respect of the
goods in question will be done within two weeks after the goods reaches the
destination. The appellants referred to Rule 138A of the W.B.G.S.T. Rules
and submitted that the goods were being transported with the valid
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documents, as mentioned in the said Rule. Further, the appellants placed
reliance on the CBIC Circular No.76/50/018-GST dated 31st December,
2018 and a decision of this Court. The authority, while adjudicating the
show-cause notice came to the conclusion that the consignment was being
transported without valid documents, which is in contravention of Section
68 of the W.B.G.S.T. Act and Rule 138A of the W.B.G.S.T. Rules and
attracts penalty under Section 129 of the Act.
7. On going through the show-cause notice, we find that the authority
accepted the stand taken by Mr. Ghosh as "Gospel Truth" without
conducting any verification and without putting the appellants/writ
petitioners on notice about the stand taken by M/s. Ghosh Enterprises and
straightway proceeded to hold that the transport of the goods was without
valid documents. It is rather surprising as to how the Department
accepted the stand taken by Mr. Siddhartha Ghosh without any verification
on the date when the goods were detained, on the date when spot
inspection was made by the authority in the premises of the M/s. Ghosh
Enterprises and more particularly, when the GSTIN of the M/s. Ghosh
Enterprises was active as of August 1, 2024.
8. Assuming a case where goods have been transported and there is suspicion
with regard to place of origin of the case or such other matters, normally
the tax authorities cause verification and if the consignee/selling dealer
takes a stand that he has not issued the tax invoice and he has no role to
play for the transport of the goods, immediately the Department will cause
verification of the correctness of the stand taken by the consignee/selling
dealer.
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9. In the case on hand, it is rather surprising that no such verification was
caused before issuance of show-cause notice to the appellants/writ
petitioners and they accepted the stand taken by Mr. Ghosh as absolute
true. The authority has erred in doing so, which has ultimately resulted in
issuance of order of penalty.
10. Section 129 deals with detention, seizure and release of goods and
conveyances in transit. Sub-section (1) of Section 129 commences with a non-
obstante clause stating that notwithstanding anything contained in this Act,
where any person transports any goods or stores any goods while they are in
transit in contravention of the provisions of this Act or the rules made
thereunder, all such goods and conveyance used as a means of transport for
carrying the said goods and documents relating to such goods and conveyance
shall be liable to detention or seizure and after detention or seizure, shall be
released subject to the conditions stipulated in Clauses (a), (b) and (c) of sub-
section 1 of Section 129.
11. Section 68 of the Act deals with inspection of goods in movement. Sub-section
(1) of section 68 states that the Government may require the person in charge
of a conveyance carrying any consignment of goods of value exceeding such
amount as may be specified to carry with him such documents and such
devices as may be prescribed. Sub-section (2) states that the details of
documents required to be carried under sub-section (1) shall be validated in
such manner as may be prescribed. Sub-section (3) states, where any
conveyance referred to in sub-section (1) is intercepted by the proper officer at
any place, he may require the person in charge of the said conveyance to
produce the documents prescribed under the said sub-section and devices for
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verification, and the said person shall be liable to produce the documents and
devices and also allow the inspection of goods.
12. The documents and devices, which are as prescribed under Rule 138A of
the Rules, deals with documents and devices to be carried by a person-in-
charge of a conveyance. The sub-rule (1) states that the person in charge of
a conveyance shall carry (a) the invoice or bill of supply or delivery
challan, as the case may be; and (b) a copy of the e-way bill in physical
form or the e-way bill number in electronic form or mapped to a Radio
Frequency Identification Device (RFID) embedded on to the conveyance in
such manner as may be notified by the Commissioner.
13. It is not in dispute that the vehicle, on the date when it was intercepted and
the goods were detained, the documents to be carried as stipulated under
Rule 138A(1)(a) and (b) were carried by the transporter, who is the second
appellant/writ petitioner. Therefore, on the date when the vehicle was
intercepted and the goods were detained, there is no contravention of
Section 68 read with Rule 138A. If such be the position, Section 129 would
have no application to the facts and circumstances of this case. Apart from
that, the department has not been able to establish that there was an
intention to evade payment of tax by the appellants/writ petitioners, which
is a pre-requisite to invoke the power under Section 129 of the Act.
14. The Circular issued by the CBIC 31st December, 2018 is of relevance. The
Circular has clarified certain issues in Serial No.6 of the Circular. The
issue was "who will be considered as the owner of the goods for the
purposes of Section 129(1) of the CGST Act?" It was clarified that if the
invoice or any other specified document is accompanying the consignment
of goods, then either the consignor or the consignee should be deemed to
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be the owner. In the instant case, the invoice and the stipulated
documents clearly show that the goods were sent to the proprietorship firm
of the appellants/writ petitioners and for all legal purposes, the
appellants/writ petitioners is deemed to be the owner of the goods.
15. It may be a different case if the department had caused a verification of the
stand taken by M/s. Ghosh Enterprises and before coming to a conclusion
that his stand is correct, the appellants/writ petitioners ought to have been
put on notice, otherwise, it would be in violation of the principles of natural
justice as the appellant is being condemned without being heard.
16. If the procedure adopted by the Department in the instant case, is followed
in other cases, it may lead to various other consequences, which
undoubtedly, would be against the interest of Revenue.
17. It appears that subsequently the registration of M/s. Ghosh Enterprises
had been cancelled. However, there is no record placed before the Court to
support such a stand. Even assuming the registration certificate of M/s.
Ghosh Enterprises was subsequently cancelled, it can have no impact on
the genuineness of the transaction done by the appellant as the vehicle was
detained alongwith the goods for the purpose of verification of the
genuineness of the goods in transit i.e. its quantity etc., and/or tendered
documents require further verification. Therefore, the action initiated
against the appellants/writ petitioners based on an uncorroborated stand
taken by Mr. Siddhartha Ghosh is wholly illegal and unsustainable in law.
18. Accordingly, the appeal is allowed along with the connected application (I.A.
No. CAN 1 of 2025). The order passed in the writ petition is set aside and
the order imposing penalty under Section 129(1)(b) is set aside. The
respondents/Department are directed to refund the penalty collected from
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the appellants/writ petitioners within a period of eight weeks from the date
of receipt of server copy of this judgment and order.
19. No costs.
20. Urgent photostat certified copy of this order, if applied for, be furnished to
the parties expeditiously upon compliance of all legal formalities.
(T.S. SIVAGNANAM)
CHIEF JUSTICE
I agree.
(CHAITALI CHATTERJEE (DAS), J.)
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