Failure to produce necessary documents will lead to cancellation of registration for supply of goods: High Court of Madhya Pradesh

As per Section 129 of GST Act, there is no mandate for detaining goods merely because driver took an alternate route to reach the destination, if the goods are covered by valid E-way Bill. If all the requisite documents i.e., e-way bill and invoices are available, it cannot be said that no physical transportation of goods had been taken place. However, bringing all the requisite documents on record is a necessary condition. This auspicious judgment was recently passed by the High Court of Madhya Pradesh in the matter of M/S OM TRADING COMPANY V DEPUTY COMMISSIONER OF STATE TAX & ORS. [WRIT APPEAL NO.1823/2019] by Honourable Justice S.A.Dharmadhikari and Justice Anand Pathak.

This Writ Appeal was preferred under Section 2 (1) of the Madhya Pradesh Uchch Nyayalaya Adhiniyam, 2005 and a challenge has been made to the order passed by the learned Single Judge whereby Writ Petition challenging the order passed by the learned appellate authority was dismissed.

The brief facts leading to filing of the writ petition were that the appellant was a dealer registered under the Central Goods and Services Tax Act, 2017 and was engaged in selling and purchasing Clarified Butter (Ghee), Butter and other milk products under the name of M/s Om Trading Company Gwalior.

On 05.10.2018, a show cause notice was issued by the Deputy Commissioner of State Tax Gwalior, in which it was stated that the business is carried only on papers and the e-way bills are downloaded but the concerned vehicles are not transporting any goods in actuality. The cause of action arose when a report to the Joint Commissioner, Gwalior transpired that the appellant had carried out business transactions with one M/s Macro International, Agra, and had purchased 8100 kgs and 1000 tin of clarified butter.

Later a show cause notice was issued since bills were without supply of goods and in violation of law. The notice was issued under Rule 21 (b) of the Central Goods and Services Tax Rules 2017 and appellant failed to prove his e-way transaction details so his registration was cancelled. Thus, he preferred an appeal under Section 107, and Appellate Authority affirmed the order passed by the Commissioner of State Tax. Later he filed a writ petition whereby the orders passed by the Commissioner of State Tax as well as Appellate Authority have been affirmed. Being aggrieved, the present Writ Appeal has been filed.

The HC stated that “Ongoing through the order passed by the appellate authority it appears that the detailed inquiry was conducted before passing the impugned order, in which certain discrepancies were found with regard to the business of the appellant. It was found that the appellant had failed to prove away bill transaction details, therefore, the registration was canceled. A proper opportunity of hearing was afforded to the appellant. No cogent documentary evidence is available on record to justify the stand taken by the appellant. The learned Single Judge has rightly come to the conclusion and dismissed the writ petition.

Court also observed that “The judgments relied on by the learned counsel for the appellant are of no assistance to the appellant inasmuch as the facts of those cases and the present case are altogether different. In the present case, in the detailed inquiry, it was found that no material was physically transferred from Agra to Gwalior.

Thus, the court held that “no fault can be found in the finding recorded by the learned Single Judge as well as learned appellate authority” and hence dismissed the writ appeal.

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