Confiscation notice without proper grounds deemed invalid; Authority instructed to review.

The court directed the writ-applicant to present their case before the authority, emphasizing the need for intent to evade tax for confiscation under Section 130 of the Central GST Act, 2017. The court highlighted that the grounds stated in the show-cause notice were insufficient to justify confiscation and criticized the issuance of confiscation notices without proper examination. The writ-application was disposed of with instructions for the authority to consider the court's observations and pass an appropriate order within four weeks, citing the principles outlined in a relevant case.

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Issues Involved:
1. Legality and validity of the detention order and notices issued under Section 130 of the Central GST Act, 2017.
2. Requirement of intent to evade tax for confiscation under Section 130 of the Central GST Act, 2017.
3. Adequacy of grounds stated in the show-cause notice for invoking Section 130.

Detailed Analysis:

Issue 1: Legality and Validity of the Detention Order and Notices
The writ-applicant, a proprietory concern engaged in the business of Arecanut, filed a writ-application under Article 226 of the Constitution of India, seeking to quash and set aside the detention order dated 25/26.04.2019 and the subsequent notices. The court noted that the controversy was narrow and focused on the legality of the notice dated 26th April 2019 issued in Form GST MOV10 by the State Tax Department. The notice called upon the writ-applicant to show cause why the goods and conveyance should not be confiscated under Section 130 of the Central GST Act, 2017.

Issue 2: Requirement of Intent to Evade Tax for Confiscation
The principal argument by the writ-applicant was that the show-cause notice lacked any mention of intent to evade tax, which is a crucial element for confiscation under Section 130. The court referred to the case of Synergy Fertichem Pvt. Ltd. Vs. State of Gujarat, emphasizing that for invoking Section 130, there must be a clear indication that the contravention was with the intent to evade tax. The court highlighted that mere contravention without intent is insufficient for confiscation. The court reiterated that the presumption of culpable mental state under Section 135 is applicable only in prosecution cases and not for Section 130.

Issue 3: Adequacy of Grounds Stated in the Show-Cause Notice
The grounds stated in the show-cause notice included: deviation from the E-way Bill route, no business activity at the stated address, and undervaluation of goods. The court observed that these grounds, even if accepted as true, were not sufficient to attract the provisions of Section 130 for confiscation. The court emphasized that the authorities must closely examine whether the contravention was with the intent to evade tax. The court criticized the practice of issuing confiscation notices at the threshold without proper application of mind and sufficient grounds.

Conclusion:
The court directed the writ-applicant to make their case before the concerned authority, pointing out the principles explained in the Synergy Fertichem case. The authority was instructed to consider the submissions and observations made by the court and pass an appropriate order within four weeks. The writ-application was disposed of with these directions, and direct service was permitted.

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