2020 (4) TMI 494 - HC - GST

Court grants release of seized truck and goods, quashes confiscation notice under GST Act, emphasizes tax evasion scrutiny.

The court granted the writ applicant's request for the release of a truck and goods seized by authorities, upon depositing a specified amount. The notice ... Detention and seizure - release on payment of tax or furnishing security - confiscation under Section 130 of the GST Act - application of mind in issuing confiscation notice - presumption of intent to evade taxRelease on payment of tax or furnishing security - detention and seizure - confiscation under Section 130 of the GST Act - application of mind in issuing confiscation notice - Whether the vehicle and goods detained in transit were entitled to release pending adjudication and the scope of further proceedings under the confiscation provision. - HELD THAT: - The Court recorded that an interim order had been passed by a Coordinate Bench directing release of the vehicle and goods upon payment of the tax specified in the impugned notice, and that the writ applicant availed of that interim order and obtained release by depositing the tax. The Court observed that the substantive proceedings are at the stage of show cause under Section 130 of the Central Goods and Services Act, 2017, and that those proceedings shall continue in accordance with law. The applicant was permitted to rely on the recent pronouncement in Synergy Fertichem Pvt. Ltd., particularly Paragraphs 99-104, which emphasise that not every contravention at the stage of detention and seizure justifies immediate invocation of the confiscation provision; that authorities must examine the nature of contravention and whether there is material to form a bona fide belief of intent to evade tax; and that invocation of Section 130 at the threshold requires recorded reasons and material upon which the belief is formed. The Court left it open to the applicant to make good his case that the show cause notice deserves to be discharged, rather than deciding the merits of confiscation at this stage. [Paras 4, 5, 6, 7]The vehicle and goods were released pursuant to the earlier interim direction upon payment of the tax; the show cause proceedings under Section 130 shall proceed in accordance with law, the applicant may invoke the observations in Synergy Fertichem Pvt. Ltd., and the writ is disposed of to that extent.Final Conclusion: Writ application disposed; rule made absolute to the extent recorded - vehicle and goods released on payment as permitted earlier, and show cause proceedings under Section 130 to continue with liberty to the applicant to urge reliance on the cited observations. Issues:- Release of truck and goods- Quashing of notice for proposed confiscation under GST Act- Direction to stay further proceedings- Grant of ad-interim relief- Interpretation of Sections 129 and 130 of GST ActRelease of Truck and Goods:The writ applicant sought a writ of mandamus for the release of a truck and its goods seized by the authorities. A Coordinate Bench ordered the release upon depositing a specified amount. The applicant availed this interim relief and got the vehicle and goods released by paying the tax amount. The proceedings are now at the show cause notice stage under Section 130 of the Central Goods and Services Act, 2017.Quashing of Notice for Confiscation:The applicant also requested the quashing of a notice proposing confiscation under Section 129 of the GST Act. The Court directed the release of the vehicle and goods upon payment of tax as per the notice. The applicant can refer to a previous judgment for arguments related to the nature of contraventions and the intent to evade tax in such cases.Direction to Stay Further Proceedings:The applicant was granted ad-interim relief by the Court, allowing the release of the vehicle and goods upon depositing a specified amount. The Court emphasized the need for authorities to closely examine contraventions and intent to evade tax before invoking Section 130 of the Act. It highlighted the importance of forming a strong case before taking action under Section 130 at the detention and seizure stage.Interpretation of Sections 129 and 130 of GST Act:The judgment referred to the provisions of Sections 129 and 130 of the GST Act, emphasizing the need for authorities to assess contraventions and intent to evade tax before initiating confiscation proceedings. It outlined that confiscation under Section 130 is a penal action meant to deter tax evasion, requiring a strong case and intense application of mind. The judgment clarified that not every contravention automatically leads to confiscation and stressed the importance of justifiable reasons for invoking Section 130 at the initial stage.In conclusion, the writ application was disposed of with the rule being made absolute to the extent mentioned, leaving it to the applicant to establish why the show cause notice issued should be discharged.