2019 (10) TMI 938 - HC - GST

Confiscation orders quashed due to procedural lapses, conveyance and goods released.

INSHA TRADING COMPANY THROUGH PROPRIETOR MUSTAK JAMALBHAI SHEIKH Versus STATE OF GUJARAT

INSHA TRADING COMPANY THROUGH PROPRIETOR MUSTAK JAMALBHAI SHEIKH Versus STATE OF GUJARAT - [2019] 71 G S.T.R. 337 (Guj), 2019 (31) G.S.T.L. 24 (Guj.) Issues Involved:1. Validity of the order dated 08.04.2019 passed under section 130 of the CGST Act.2. Validity of the order dated 14.01.2019 for detention of the conveyance and goods under section 129(1) of the CGST Act.3. Compliance with procedures prescribed by the Circular No. 41/15/2018-GST dated 13.04.2018.4. Justification for the confiscation of goods and conveyance.Issue-wise Detailed Analysis:1. Validity of the order dated 08.04.2019 passed under section 130 of the CGST Act:The petitioner challenged the order of confiscation of the vehicle and goods under section 130 of the CGST Act. The court noted that the conveyance was accompanied by proper documents, including the e-way bill and invoice. The third respondent detained the vehicle for verification but did not find any discrepancies. Despite this, the third respondent issued a notice under section 130 and subsequently passed an order of confiscation. The court held that the reasons for confiscation were unrelated to the initial grounds for detention and that the proper procedure was not followed. Therefore, the confiscation order under section 130 was deemed unsustainable.2. Validity of the order dated 14.01.2019 for detention of the conveyance and goods under section 129(1) of the CGST Act:The court examined the detention order issued under section 129(1) of the CGST Act. The vehicle was detained on the grounds that the details in bilty No.15615 appeared disproportionate. However, no discrepancies were found in the e-way bill or tax invoice. The court highlighted that the proper officer did not prepare or upload the required reports (Form GST EWB-03, Form GST MOV-04) within the stipulated time frame as per the circular dated 13.04.2018. Consequently, the detention order lacked a valid basis and was deemed unjustified.3. Compliance with procedures prescribed by the Circular No. 41/15/2018-GST dated 13.04.2018:The court emphasized the procedural lapses in the detention and verification process. The circular mandates that upon issuing Form GST MOV-02 for physical verification, the proper officer must prepare and upload a report in Part A of Form GST EWB-03 within 24 hours and conclude the inspection within three working days. However, the third respondent failed to comply with these requirements. No reports were prepared or uploaded, and no discrepancies were found. The court concluded that the procedural non-compliance rendered the detention and subsequent actions invalid.4. Justification for the confiscation of goods and conveyance:The respondents argued that the petitioner was involved in fraudulent activities, including non-maintenance of stock records and collusion with the transporter. Despite these allegations, the court found that the initial detention of the conveyance was not justified based on the documents provided. The court held that the respondents could take appropriate action against the petitioner for any contraventions under the CGST Act, but the confiscation of the goods and conveyance in the present case was unwarranted.Conclusion:The petition was allowed, and the orders dated 08.04.2019 and 29.01.2019 were quashed. The court directed the third respondent to release the conveyance and goods immediately. It clarified that the release would not prevent the respondents from proceeding against the petitioner for any contraventions of the GST Acts and rules. The rule was made absolute with no order as to costs, and direct service was permitted.