2019 (4) TMI 1448 - HC - GST

Court quashes demand order, releases goods for security, emphasizes reasoned judgments

M/s NEUVERA WELLNESS VENTURES PVT LTD. Versus STATE OF GUJARAT

The court partially ruled in favor of the petitioners by quashing the unreasoned demand order and instructing the second respondent to reconsider the ... Release of detained goods with Truck - detention on the ground that Part-B of the E-way bills was not generated - validity of SCN - HELD THAT:- A perusal of the impugned order dated 2.4.2019 passed by the second respondent in FORM GST MOV-09 whereby tax and penalty have been demanded, reveals that the basis for computing the additional tax is the IGST paid by the petitioners. Moreover, in the impugned order there is not even a whisper as regards the submissions advanced on behalf of the petitioners, nor have the same been dealt with in the body of the order. No reasons have been assigned by the second respondent for the purpose of holding the petitioner liable to payment of tax and penalty despite the fact that IGST had already been paid on such transaction and the goods were being moved from the customs warehouse to the petitioner's own godown and it being the case of the petitioners that there was no supply, and hence, the provisions of GST Act are not applicable. The impugned order is, therefore, totally bereft of any reasoning. Reasons, it is well known, are the heart and soul of an order passed by a judicial/quasi-judicial order, without which it is difficult to pronounce one way or other as regards the validity of such order - the matter is required to be restored to the file of the second respondent for deciding the same afresh in accordance with law. Issues:Challenge to demand order under CGST Act, detention and seizure of goods, release of goods, payment of applicable tax and penalty, absence of Part-B of E-way bills, non-reasoned order, liability to pay tax and penalty, release of perishable goods.Analysis:1. The petitioners challenged the demand order dated 2.4.2019 under Article 226 of the Constitution of India, seeking release of goods detained and seized under sections 129 and 130 of the CGST Act. The goods, including Whey Protein Powder, were imported and cleared for home consumption after payment of customs duty and IGST. The detention occurred due to the absence of Part-B of E-way bills during transportation to the petitioner's warehouse in Maharashtra.2. The petitioners argued that as there was no supply of goods during transportation, the liability to pay GST did not arise. They contended that the second respondent should have treated the goods as exempted goods and requested payment equal to two percent of the value of goods or twenty-five thousand rupees, whichever is less. Additionally, the petitioners highlighted the provisions of section 129(1) and (2) of the CGST Act regarding release of detained goods upon payment of tax and penalty or furnishing security.3. The impugned order demanded tax and penalty based on IGST paid by the petitioners without providing any reasoning or addressing the submissions made by the petitioners. The court emphasized that reasons are essential for a valid judicial/quasi-judicial order. As the order lacked reasoning, it was deemed unreasoned and unsustainable. The matter was directed to be reconsidered by the second respondent with proper consideration of the petitioners' submissions.4. Despite the above, considering the perishable nature of the goods, the court ordered the immediate release of the goods and conveyance upon the petitioners furnishing security by way of a bond of twelve lakhs rupees to the authorities. This release was granted to provide immediate relief to the petitioners, and it did not imply any opinion on the liability of the petitioners to pay tax and penalty.5. In conclusion, the petition partly succeeded, leading to the quashing of the impugned order and restoration of the matter to the second respondent for a reasoned decision. The immediate release of the perishable goods was ordered subject to the specified security, emphasizing the importance of a speaking order and due consideration of all contentions raised by the petitioners.