Detention of goods upheld pending appeal, compliance with statutory provisions crucial. Bank guarantee or risk confiscation.

The court upheld the detention of goods subject to a penalty order, emphasizing the need for compliance with statutory provisions. The petitioner was directed to await the appeal outcome or provide a bank guarantee for the tax and penalty amounts to secure the release of goods. Failure to provide security could lead to confiscation under the CGST Act. The court stressed the importance of adhering to legal requirements to prevent confiscation and instructed the respondent to decide on the appeal within three months.

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Issues:
1. Appeal against penalty order and release of goods pending appeal.

Analysis:

The petitioner appealed against an order of penalty and sought the release of goods pending the appeal. The petitioner had paid 10% of the disputed tax as a condition for maintaining the appeal. The goods subject to the penalty order were still in the custody of the department, and the petitioner had not provided any security for their release. The court considered the arguments presented by both the petitioner's counsel and the Government Pleader.

The Government Pleader pointed out that the appeal before the 2nd respondent was against an order confirming the tax and penalty liability. The detention of the goods and the possibility of confiscation under Section 130 were still valid. The petitioner had not complied with the conditions under Section 129(6), which could lead to confiscation. It was suggested that the petitioner could seek release by providing a bank guarantee for the entire tax and penalty amount as per Section 129(5).

The court acknowledged the Government Pleader's submission that the mere pendency of an appeal did not warrant the release of goods without security. Non-payment of security could independently result in confiscation under Section 130 of the CGST Act. The court directed the 2nd respondent to consider and decide on the appeal within three months, after which the petitioner could seek the release of goods by furnishing a bank guarantee for the confirmed tax and penalty amounts. Alternatively, the petitioner could await the outcome of the confiscation proceedings.

In conclusion, the court emphasized the importance of complying with the statutory provisions regarding the release of goods pending appeal and highlighted the significance of providing necessary security to prevent confiscation under the law.

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