Seizure of assets: the discrepancy in the amount disclosed in the documents and the amount recovered is sufficient to suspect tax evasion
Sasi Pathirakunnath (first petitioner) is said to be the owner of an establishment known as ‘A One Gold’, which has its business headquarters in Chembukavu, Thrissur district. Nikhil Suresh (second petitioner) is an acquaintance of 1street petitioner. The 2North Dakota the petitioner was traveling on a train from Thrissur to Alleppy on 7 September 2022. He was carrying some gold ornaments from Thrissur to Alleppy, at the behest of 1street petitioner.
The second petitioner was detained at around 2:35 p.m. by agents of the Railway Protection Force (RPF). When questioned about the documents available with the second petitioner to take the gold, it is stated that he showed certain documents on his mobile phone, which did not seem satisfactory to the Railway Protection Force. Subsequently, at around 05:55 pm, the first petitioner allegedly brought certain documents which, according to the first petitioner, were sufficient to establish that the gold was being transported in good faith in full compliance with GST laws. However, the railway police entrusted the matter to the GST Department. This is the case of the petitioners who, at the same time, the GST officials had intercepted the goods, the goods had all the necessary documents to show that they were being transported in full compliance with GST laws. It is asserted that notwithstanding the foregoing and in complete disregard of the documents available with the petitioners, the second respondent commenced and concluded proceedings under Section 130 of the CGST/SGST Acts, which is challenged in this petition.
It is the case of the lawyer who appeared on behalf of the petitioners that there was absolutely no order to initiate, continue and conclude proceedings under Section 130 of the CGST/SGST Laws and therefore, the order Ext.P18 is completely without jurisdiction. It is alleged that where the property in question was supported by valid documents, the action of the officers in initiating and concluding proceedings under Section 130 of the CGST/SGST Acts was completely unjustified and without jurisdiction.
Department Containment
The lead government counsel would argue that even if it were assumed that interception can only be with respect to the time when notices were issued under CGST/SGST (05:55 pm on 07.09.2022), the proceeding would be initiated and concluded against the petitioners under Section 130 of the CGST/SGST Laws cannot be said to be flawed in any way. It is stated that immediately after the RPF intercepted the goods, the goods were subject to physical verification and the physical verification report suggests that the quantity of gold decorations recovered from the second petitioner had a total weight of 724.99 g, whereas the labor invoice and other documents produced to prove that the goods were being transported in good faith, showed that the total amount was approximately 825 grams. It is claimed that this discrepancy in itself is sufficient to prove that the proceedings under Section 130 of the CGST/SGST Laws were fully justified as there was a clear attempt to evade payment of tax. The subsequent explanation given by the second petitioner that he had forgotten to hand over around 100 grams of gold, which he carried in his pocket, is said to be no more than an afterthought and an attempt to ensure that the amount of property seized by the railway police and who was subsequently prosecuted under the CGST/SGST Laws, is fully consistent with the documents which are said to have been subsequently submitted by the 1st petitioner to the authorities. It is claimed that there is nothing to show that the discrepancy was not due to any illegal sales during the course of transportation.
Petitioner’s argument
The attorney-at-law who appeared on behalf of the petitioners, in response, would argue that where the assets were fully covered by documents, the mere fact that there was some discrepancy in the total amount is not grounds for initiating proceedings under Article 130 of the CGST/SGST laws. He refers to the provision of Section 130 of the CGST/SGST Laws and argues that proceedings under Section 130 of the CGST/SGST Laws could have been brought only if there was a deliberate attempt to evade payment of tax. It is claimed that even if the GST Department’s entire case is accepted, there is nothing to show that there was any attempt to evade payment of any tax properly owed to the Government. It is argued that, therefore, the proceeding can be annulled.
High Court Order
The indisputable facts of the case are that the second petitioner was carrying certain gold ornaments on a train from Thrissur to Alleppy. Initially it was intercepted by officials attached to the Railway Protection Force and petitioner 2 was only able to show certain documents on his mobile phone, which according to the petitioners, suggest that the gold ornaments were being transported in a valid manner and in accordance with all the requirements of the CGST/SGST Laws and the Regulations issued under them. It is also not in dispute before me that, at the time the State GST officials became involved in the matter, the first petitioner had produced certain documents which, according to the petitioners, are sufficient to transport gold in the manner in which the first petitioner did. second petitioner. . However, there is no satisfactory explanation for the fact that there was a discrepancy between the amount mentioned in the documents submitted by the 1st petitioner that night to the tax authorities and the amount actually recovered from the petitioner. The assertion of the lawyer who appeared on behalf of the petitioners that the second petitioner had forgotten to hand over some 100 g of gold, which he was carrying in his pocket, cannot be accepted, at least at this stage. The fact that there was a discrepancy in the number of documents claimed to have been produced and the amount recovered from the petitioner himself 2 is, in my opinion, sufficient for the Department to suspect tax evasion.. I do not propose to find anything on the merits with respect to the adjudication order issued by the second defendant under Section 130 of the CGST/SGST Laws for the reason that it would not be appropriate to do so, considering the fact that the petitioners have appeals . against order Ext.P18. Therefore, this question is being considered solely for the purpose of deciding whether the officers were right to initiate proceedings under Section 130 of the CGST/SGST Acts. In the totality of the facts and circumstances of the case, I cannot find that there was malice or ill will or lack of jurisdiction in bringing proceedings under Section 130 of the CGST/SGST Acts. I make it clear that I have not found the order in Ext.P18 to be valid on its merits and that the petitioners will be able to present all their arguments before the appellate authority in a properly constituted appeal.
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