2022 (7) TMI 1364 - HC - GST

Confiscation Order Under GST Act Section 130 Quashed Due to Natural Justice Violations and Inadequate Response Opportunity

SMIT DIPEN SHAH, M/s LIBERTY PRODUCTS Versus STATE OF GUJARAT

The HC quashed a confiscation order under GST Act section 130, finding authorities violated natural justice principles by not allowing the petitioner ... Confiscation of goods alongwith conveyance - section 130 of the Goods and Services Tax Act, 2017 - HELD THAT:- A contention has been raised by the petitioner that the goods in question were purchased from one M/s. Om Bana Enterprise and the same was being transported. When the goods were in transit, the authorities intercepted the goods and confiscated them. In another words, it was submitted that the authorities sought to derive their powers to overcome the possession of the petitioner of goods in transit from section 129 of the GST Act. It was submitted that since section 129 of the GST Act begins with the non-obstante clause, it is a provision independent of section 130. It was submitted that the entire exercise of powers under section 130 was without jurisdiction. While the question raised by the petitioner would require a detailed examination, it could be immediately noticed that the impugned order came to be passed in a quick succession as noticed above, that too without permitting the petitioner to file reply. The hot hurry on the part of the authorities sacrificed the right of the petitioner to reply and in the process, there was evident breach of principles of natural justice to the prejudice to the petitioner. A prima facie case is made out for grant of interim relief - Rule, returnable on 21.07.2022. Issues:Challenge to order confiscating goods under the Goods and Services Tax Act, 2017 without proper opportunity to respond.Analysis:The High Court of Gujarat heard a case challenging an order passed under section 130 of the Goods and Services Tax Act, 2017, confiscating goods carried by the petitioner. The petitioner contended that the authorities acted without jurisdiction, as the goods were purchased from a specific enterprise and were in transit when confiscated. The petitioner argued that the authorities misused their powers under section 129 of the GST Act, which led to a breach of principles of natural justice by not allowing the petitioner to file a reply before passing the impugned order.The Court noted the quick succession of events leading to the order, highlighting the authorities' haste in passing the order without giving the petitioner a chance to respond adequately. This rush compromised the petitioner's right to natural justice. The Court acknowledged the need for a detailed examination of the petitioner's contentions but found a prima facie case for granting interim relief due to the evident breach of principles of natural justice.As a result, the Court directed the release of the goods and conveyance of the petitioner, subject to the petitioner depositing Rs. 40 lakhs with the competent authority within ten days. Additionally, the petitioner was required to furnish a bond of Rs. 1,17,74,440 along with the deposit. Non-compliance with these conditions would render the grant of interim relief void.The Court set the next hearing on 21.07.2022 and allowed direct service for the second respondent. The petitioner was instructed to serve notice of the Rule on both respondents. The Court also permitted the filing of an affidavit-in-reply before the next hearing date.