The Calcutta High Court (Jalpaiguri Bench) held that the CBIC Circular dated December 31, 2018, cannot be applied in cases where the genuineness of the transaction itself is doubted by the authorities. Since the authorities questioned the petitioner’s procurement and found discrepancies, the Court stated that the Circular cannot be used as a shield to ward off legal scrutiny in cases involving dubious invoices or undisclosed transactions.
The Court clarified that a circular issued by the Central Board of Indirect Taxes & Customs would be binding on all its officers, but at the same time, there can also not be any cavil to the proposition that a circular issued by the Board whether instructive or clarificatory or otherwise has to operate within the statutory framework and has to be applied only when there is no doubt raised regarding the genuineness of the consignment and the transaction and the
A Single Judge Bench of Justice Om Narayan Rai observed that the relevant GST authority has concluded that the petitioner “is procuring and supplying dried areca nut procured from other sources, evading duty and reflecting under his own firm under the guise of their own GST credential and Bills” for “tax evasion”.
However, acknowledging that the goods (areca nuts) have a limited shelf life, the Bench directed the release of the goods and the conveyance to balance equities. The Bench, at the same time, cautioned that such release is conditional upon the petitioner paying the penalty determined under Section 129(1)(a) and furnishing a bank guarantee for the penalty amount.
Briefly, the petitioner, a dealer of areca nuts, had sold 17,550 kgs of areca nuts to Surana Supri Centre in Nagpur. When the vehicle transporting the goods was intercepted by GST authorities, a physical verification revealed that the actual weight of the consignment was 18,800 kgs, which was 1,300 kgs more than the weight declared in the tax invoice. This led to an order for detention under Section 129(1) of the CGST/WBGST Act, 2017. Subsequently, a show-cause notice was issued proposing penalties under Sections 129(1)(a) and 129(1)(b) of the CGST Act, on grounds of weight discrepancy and the allegation that the petitioner’s supplier was of dubious existence.
Appearances:
Advocates P. Verma and Pooja Sah, for the Petitioner/ Taxpayer
Advocates Ratan Banik and Bishwaraj Agarwal, for the Respondent/ Revenue
