GST| Merchant Or His Convoy Is Free To Choose Route For Movement Of Goods From Origin Point To Destination Point: Karnataka HC

The Karnataka High Court observed that the merchant or his convoy is free to choose the route for the movement of goods from the point of origin to the point of destination.

The Court observed thus in a writ appeal filed by the Joint Commissioner of Commercial Taxes (Appeals) against the order of the Single Judge by which the obligation to pay tax and penalty upon a company named M/s. Transways India Transport was quashed coupled with a direction to release the vehicle.

A Division Bench of Justice Krishna S. Dixit and Justice Ramachandra D. Huddar held, “It can be said without the risk of contradiction that as the law now stands in Karnataka, a merchant or his convoy is free to choose the route for the movement of goods from the point of origin to the point of destination and that he has specified a particular route in the consignment documents, would not come in the way of that route being altered, although destination cannot be. In the absence of law, he cannot be faltered if he chooses a circuitous route in preference to linear one in variance with the impression given to the authorities in the said documents as long as travel time and destination point remain intact.”

The Bench said that it is open to a trader to take goods to the destination point in whichever route he opts, unless the law otherwise requires, destination point being intact and such a right needs to be recognized as of necessity to trade or business.

AGA Aditya Vikram Bhat appeared on behalf of the appellants while Advocate K.J. Kamath appeared on behalf of the respondent.

Factual Background -

The vehicle in question was intercepted in an industrial area more than 20 kms away from the destination point of Bengaluru city. The statement of its driver was recorded, goods in movement were inspected, and the particulars of the documents tendered by the driver showed that the goods were moving from Maharashtra to several places in Bangalore. The CTO passed an order under Section 129(3) of the Goods and Services Act, 2017 (GST Act), confirming the tax liability coupled with a penalty.

The CTO further directed the respondent company to make the payment forthwith. The respondent company carried the matter in appeal at the departmental level and the same was negatived vide an order. Against this, the respondent filed a writ petition and the same was favoured by the Single Judge. Being aggrieved by this, the appellants approached the Division Bench.

The High Court in the above regard noted, “Right to movement whether by foot, cart, boat, aircraft or on a horseback, is constitutionally guaranteed to the citizens as a Fundamental Right under Article 19(1)(d) and ordinarily that avails to the merchants too when they carry goods for trade. Production of goods but not distributing them would not serve interest of the community, is the underlying principle of Article 301 of the Constitution … Scope of right to movement is not the same always; it is variable depending upon the circumstances & conditions.”

The Court added that a trader cannot claim unfettered right of movement whilst carrying goods that are regulated by law, however, in the absence of such law being shown, fetter cannot be imposed.

“… the impugned orders of authorities that were structured on a contra premise could not stand the test of law. The judgement of the learned Single Judge therefore is inexplicable, despite the said reason not animating it. … the question is whether law mandates conveyance in a particular route and prohibits alteration of travel route qua the one impressed in the consignment documents. We have not been shown any such law, rule or ruling”, it said.

The Court enunciated that what is required by law is the furnishing of consignment documents and specified particulars of consignor, consignee, goods, route maps & destinations.

“Requirement of furnishing particulars of route map, etc., is one thing, compulsive adherence to the impressed route is another. There is law with regard to the former, is true; but latter is non liquet i.e., an area where there is no binding rule. When law does not require giving of reasons for changing the direction or route, whether the reason offered by the driver for opting another route is true or false, pales into insignificance. However, this does not mean a driver of conveyance can lie with impunity, the motto Satyameva Jayate (Truth alone succeeds) having been inscribed in our national emblem i.e., Ashoka Sthamba”, it further emphasised.

Accordingly, the High Court dismissed the appeal.

Cause Title- The Joint Commissioner of Commercial Taxes (Appeals) & Anr. v. M/s. Transways India Transport (Neutral Citation: 2024:KHC:22835-DB)

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