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

The court partially ruled in favor of the petitioners by quashing the unreasoned demand order and instructing the second respondent to reconsider the matter with proper reasoning. Despite this, the court ordered the immediate release of the perishable goods upon the petitioners providing security. The release was granted to offer immediate relief without determining the liability for tax and penalty. The decision highlighted the necessity of reasoned judicial/quasi-judicial orders and thorough consideration of all arguments presented by the petitioners.

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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.

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