Court Invalidates Show Cause Notice in GST Transit Case, Orders Immediate Release

The Court found that the show cause notice under section 130 was issued without following the required procedures of section 129 in a case involving goods in transit under the Central Goods and Services Tax Act, 2017. As a result, the petitioner established a strong prima facie case for interim relief, leading to the immediate release of the detained goods and truck. The petitioner was directed to submit an undertaking for cooperation, and the matter was adjourned for further proceedings.

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Issues:

1. Compliance with sections 129 and 130 of the Central Goods and Services Tax Act, 2017 in the case of goods in transit.
2. Justification of detention order due to lack of Eway bill during transit.
3. Issuance of show cause notice under section 130 without following procedures of section 129.
4. Prima facie case for interim relief for release of detained goods.

Compliance with Sections 129 and 130:
The petitioners argued that the respondent authorities must follow the procedure outlined in sections 129 and 130 of the Central Goods and Services Tax Act, 2017, for goods in transit contravening the Act or its rules. They highlighted that section 129 mandates issuing a notice, providing a hearing, and then passing an order, before resorting to section 130. The impugned show cause notice sought penalties under section 130 without initiating proceedings under section 129, which was deemed impermissible. The petitioners emphasized that the goods had already paid integrated goods and services tax and were perishable.

Justification of Detention Order:
The Assistant Government Pleader defended the detention order citing the absence of an Eway bill during transit as the reason for detention. Referring to section 129(3) of the CGST Act, it was noted that the proper officer must issue a notice specifying tax and penalty before passing an order, ensuring the person concerned has a hearing. The show cause notice under section 130 called for confiscation due to nonpayment, but it was observed that the procedures of section 129 were not followed. Additionally, the perishable nature of the goods was acknowledged.

Issuance of Show Cause Notice:
The Court found that the show cause notice under section 130 was issued without complying with the requirements of section 129. It was noted that the Assistant Government Pleader could not confirm adherence to the procedures of sections 129(3) and (4) before issuing the notice. Consequently, the Court held that the petitioner had established a strong prima facie case for interim relief. As a result, the respondents were directed to release the detained goods and truck, with the petitioner required to submit an undertaking for cooperation in further proceedings.

Prima Facie Case for Interim Relief:
Considering the circumstances, the Court granted interim relief directing the immediate release of the detained goods and truck. The petitioner was instructed to submit an undertaking within a week, ensuring cooperation in case of an unfavorable outcome. The matter was adjourned to allow the respondents to file any necessary affidavits in response.

This detailed analysis of the judgment outlines the issues raised, arguments presented, and the Court's decisions regarding compliance with relevant sections of the CGST Act and the grant of interim relief for the release of detained goods.

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