In a significant judgment, the Allahabad High Court has held that GST authorities cannot alter their stand after verifying goods and invoices during transit. The ruling came in the case M/S Maa Kamakhya Trader vs. Additional Commissioner Grade 2 and Another (WRIT TAX No. 1386 of 2023).
Background of the Case
The petitioner, M/S Maa Kamakhya Trader, challenged a penalty order imposed by the GST department after the interception of goods during transportation from Guwahati, Assam, to Delhi. During the interception, all relevant documents, including invoices and e-way bills, were presented. A physical verification was conducted, and a report in Form MOV-04 was prepared by the concerned officer, who found no discrepancies between the goods and the accompanying documents.
Despite this, a penalty was later imposed, and the applicant’s appeal was dismissed by the departmental authorities. The petitioner then approached the High Court, arguing that the GST department had changed its stand after the initial verification, which is not legally permissible.
Key Observations by the Court
Justice Piyush Agrawal, delivering the judgment, emphasized that once the officer has verified the goods and entered the details in the MOV-04 form, the authorities cannot subsequently change or supplement their reasons for imposing a penalty.
The Court observed:
“Once on the verification report i.e. MOV-04, the items are fed by the officer concerned, after due verification, the authorities cannot be permitted to completely change its stand or further permitted to supplement by different reasons or grounds, which were not taken or mentioned while preparing the physical verification report in MOV-04.”
The High Court also noted that the respondent’s counsel admitted during proceedings that the goods’ details in MOV-04 are manually entered and not auto-filled based on HSN codes from invoices, thus establishing the authenticity of manual verification.
Ruling and Conclusion
The Court concluded that the very purpose of MOV-04 is to ascertain the accuracy of goods in transit vis-à-vis the supporting documents. If no discrepancies were found at that stage, the authorities cannot later claim otherwise.
In light of these facts, the Allahabad High Court allowed the writ petition, stating that revenue authorities must remain consistent in their stance across all stages of proceedings.
Impact of the Judgment
This ruling reinforces the principle of procedural fairness and transparency under GST law. It ensures that businesses are protected from arbitrary actions and that verification reports prepared by officers at the time of interception carry significant legal weight.