2017 (9) TMI 1044 - HC - GST

Kerala High Court: Adherence to CGST & SGST Laws for Goods Release

The Kerala High Court emphasized adherence to statutory provisions under the CGST Act and SGST Ordinance regarding detention and release of goods. The ... Detention, seizure and release of goods and conveyances in transit under Section 129 - provisional release of seized goods on execution of bond and furnishing of security under Section 67(6) and Rule 140 - adjudication following detentionDetention, seizure and release of goods and conveyances in transit under Section 129 - provisional release of seized goods on execution of bond and furnishing of security under Section 67(6) and Rule 140 - The High Court's direction for provisional release deviating from the statutory mechanism could not be sustained. - HELD THAT: - The statute provides a self-contained mechanism for detention, seizure and release of goods in transit, specifying the amounts payable on final adjudication and the consequences of payment (sub-section 1 and sub-section 5 of Section 129). Section 129(2) imports the operation of Section 67(6) for release, which permits provisional release upon execution of a bond and furnishing of security or on payment of applicable tax, interest and penalty. Rule 140 prescribes the form and manner of bond and security for provisional release. Where the statute prescribes this mechanism, a court cannot order a deviation from it. The judgment under appeal ordered provisional release in a manner inconsistent with these statutory provisions and therefore could not be sustained. [Paras 4, 5]Set aside the portion of the judgment under appeal that ordered provisional release in a manner deviating from the statutory scheme; the statutory mechanism under Section 129/Section 67(6) and Rule 140 governs provisional release.Adjudication following detention - provisional release of seized goods on execution of bond and furnishing of security under Section 67(6) and Rule 140 - The matter was remitted for fresh and expeditious adjudication with directions for physical verification and a timetable; petitioner was given liberty to seek provisional release under Rule 140(1). - HELD THAT: - In view of the need for an expeditious disposal where goods are detained and recognising the agreed undertaking by the Government Pleader, the court directed that the respondent shall produce a copy of this judgment before the adjudicating officer, who will issue necessary notice, conduct physical verification in the presence of the respondent and complete adjudication within one week. The court also permitted the petitioner to obtain provisional release by complying with Rule 140(1) (execution of the prescribed bond and furnishing security). This remits the matter to the adjudicating authority for fresh consideration and final adjudication on merits, subject to the statutory procedure for provisional release. [Paras 6, 7, 8]Directed fresh adjudication by the adjudicating officer (physical verification and completion within one week) and granted liberty to the petitioner to seek provisional release in accordance with Rule 140(1).Final Conclusion: The High Court's order directing provisional release contrary to the statutory procedure is set aside; the matter is remitted to the adjudicating authority for physical verification and completion of adjudication within one week, with liberty to the petitioner to obtain provisional release by complying with Rule 140(1). Issues: Detention of goods under Section 129 of the CGST Act and SGST Ordinance, Provisional release of goods pending adjudication, Compliance with statutory provisions for release of goods, Expedited adjudication process.In this judgment by the Kerala High Court, the respondent, a registered dealer under the KVAT Act migrated to the CGST Act, had goods detained during transportation due to irregularities in the documents accompanying the consignment. The detention was under Section 129(3) of the Central/State Goods and Services Tax Act, 2017. The writ petition challenged the detention and sought release of the goods upon payment of a specified amount. The court noted that Section 129 of the CGST Act and SGST Ordinance provides for detention, seizure, and release of goods in transit. It was highlighted that the statute outlines a specific mechanism for the release of goods pending adjudication, including the provision for provisional release upon execution of a bond and furnishing of security. The court emphasized that a deviation from the statutory provisions for provisional release cannot be ordered. However, considering the inconvenience caused by delay and the necessity for expeditious adjudication even in cases of provisional release, the court directed the respondent to produce a copy of the judgment before the relevant authority for necessary action and completion of adjudication within one week. The judgment set aside the previous order and provided the petitioner with the liberty to comply with Rule 140(1) for provisional release based on the specified conditions.The court's decision focused on upholding the statutory provisions governing the detention and release of goods under the CGST Act and SGST Ordinance. It emphasized the need for adherence to the prescribed mechanisms for provisional release and highlighted the importance of expeditious adjudication even in cases of provisional release to prevent undue delay and inconvenience to the parties involved. The judgment aimed to ensure compliance with the legal framework while balancing the interests of the parties by directing prompt adjudication of the matter within a specified timeline.