The Allahabad High Court held that no goods can be seized by the Revenue Department in the absence of any intent to evade payment of tax, and therefore, directed the Revenue Authorities to release the goods in question (cranes), after finding that the movement of cranes cannot be treated as a ‘supply or service’ in view of the binding Board Circulars, to attract the liability of tax under the GST Act.
Reference was made to the Circular No.21/21/2017 dated November 22, 2017, which prescribes that if the goods on wheel (crane) sent for interstate movement, but such goods are not for supply of the same, then it shall be treated “neither as supply of goods nor supply of services” and squarely no goods and services tax would be leviable on such movement.
A Single Judge-Bench of Justice Piyush Agarwal observed that once the goods in question, i.e., crane, held to be non-vital goods, were sent for the execution of the works contract, the same could not have been treated as a supply of goods, and hence no liability of goods and services tax would be applicable on the same.
Briefly, in this case, the petitioner, engaged in the business of works contract, in the State of Rajasthan and Bihar, was awarded a works contract by SBCC Buildcon Private Limited, for execution of embankment works pertaining to the construction of 6-lane Greenfield Varanasi-Ranchi-Kolkata Highway, under the aegis of the Bharatmala Pariyojana in the State of Bihar, on Hybrid Annuity Mode (HAM). In the meantime, as per Circular No.1/1/2017-IGST amended by Circular No.21/21/2017 dated November 22, 2017, the inter-state movement of rigs, tools, and spares, and all goods on wheels (like cranes) shall be treated ‘neither as a supply of goods nor supply of service’ and consequently no IGST was applicable on such movements.
In the present case, the petitioner transferred the Motor Grader, which was covered by the said circulars and therefore, on the said transfer, no IGST was applicable for which the petitioner engaged Padam Transport Company, which was a movement of a capital asset by the petitioner to the project site for execution of the awarded works contract for which the transporter issued a bill with wrong vehicle number, whereas the goods were transported by another vehicle to which the petitioner was never informed.
While the goods were on their journey from the State of Rajasthan to Bihar, the same were intercepted, and Form GST MOV-02 was issued directing the driver of the vehicle to station the same at the SGST Office. This culminated in the issuance of Form GST MOV-06, i.e., order of detention under Section 129 (1) of the CGST Act, 2017, and a notice was issued in Form DRC-01. However, without giving any opportunity of hearing to the petitioner, the request for release of the goods was rejected. Additionally, the petitioner was also directed to deposit the penalty.
Cases Relied On:
Collector of Central Excise, Vadodara vs. Dhiren Chemical Industries [2002 (139) E.L.T. 3 (S.C.)]
Commissioner of Central Excise, Bolpur vs. Ratan Melting & Wire Industries [2008 (231) E.L.T. 22 (S.C)]
T.K. Printer vs. Additional Commissioner Grade-2 [Writ Tax No.1486 of 2023]
Appearances:
Advocates Kaif Mohammad and Yashonidhi Shukla, for the Petitioner/ Taxpayer
CSC, for the Respondent/ Revenue
