High Court grants relief due to procedural errors in GST Act application, truck released

The Gujarat High Court ruled in favor of the petitioner, emphasizing the procedural requirements under sections 129 and 130 of the Central Goods and Services Tax Act, 2017. The court found the show cause notice dated 2.3.2019 invalid as it sought penalties under section 130 without following the necessary steps under section 129. The petitioner, having already paid taxes and penalties under section 129, was granted immediate relief with the release of the truck and its contents. The respondents were directed to justify their non-compliance with statutory provisions, and the petitioner was required to cooperate in future proceedings if needed.

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Issues:
- Interpretation of sections 129 and 130 of the Central Goods and Services Tax Act, 2017
- Validity of the show cause notice dated 2.3.2019
- Compliance with statutory provisions regarding penalty and confiscation

Analysis:

The judgment delivered by the Gujarat High Court involved a detailed analysis of the provisions of sections 129 and 130 of the Central Goods and Services Tax Act, 2017. The petitioner's counsel highlighted the procedural requirements under these sections, emphasizing the necessity for the authorities to follow the prescribed steps in cases of goods in transit contravening the Act or its rules. Specifically, it was pointed out that section 129 mandates the issuance of a notice followed by an opportunity for a hearing before passing an order. The counsel argued that only upon non-compliance with the order under section 129 can section 130 be invoked. The impugned show cause notice dated 2.3.2019 was challenged on the grounds that it sought to impose penalties under section 130 without initiating proceedings under section 129, which was deemed impermissible in law. Additionally, it was noted that the petitioner had already paid the tax and penalty under section 129 of the IGST Act as per the notice.

In response to the submissions made by the petitioner's counsel, the court issued a notice returnable on 10th April 2019 to the respondents. The respondents were directed to show cause as to why costs should not be imposed for non-compliance with relevant statutory provisions. Recognizing that the petitioner had already fulfilled the tax and penalty obligations under section 129 of the IGST Act, the court granted ad-interim relief by ordering the immediate release of Truck No.HR-55-M-3014 and its contents. However, the petitioner was instructed to submit an undertaking within a week, committing to cooperate in further proceedings if the petition did not ultimately succeed. Direct service of the order was permitted for efficient communication and compliance.

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