Court sets aside detention order & confiscation notice under GST Act, emphasizing strong reasons and good faith

The Court allowed the petitioner's challenge to the detention order and confiscation notice under the GST Act, 2017. The Court directed the immediate release of the seized truck and goods upon payment of tax, emphasizing that confiscation should be based on strong reasons and good faith, not as a default response. The judgment highlighted the importance of authorities providing detailed materials and reasons for invoking confiscation, clarifying that not every contravention warrants confiscation. The Court disposed of the writ application, allowing the petitioner to argue for the discharge of the show cause notice, emphasizing the need for judicious exercise of discretion by authorities.

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Issues:
Challenge to detention order and confiscation notice under GST Act, 2017.

Analysis:
The petitioner filed a Writ Application challenging the detention order and confiscation notice dated 31.7.2019 issued by Respondent No.2 under the GST Act, 2017. The Co-ordinate Bench of the Court noted that the petitioner, engaged in trading of metal scrap, sought release of a seized truck and goods under Sections 129 and 130 of the GST Act. The Court directed immediate release of the truck and goods upon payment of tax. The petitioner availed the interim order and got the vehicle and goods released by paying the tax amount. The proceedings were at the show cause notice stage under Section 130 of the Act. The Court referred to a recent judgment and emphasized that authorities must closely examine contraventions and intent to evade tax before invoking confiscation under Section 130. It highlighted that confiscation should not be a default response and must be based on strong reasons and good faith. The Court emphasized the need for authorities to provide detailed materials and reasons for invoking confiscation. The judgment clarified that every contravention may not warrant confiscation, and action must be taken in good faith, not as a mere pretense.

In conclusion, the Court disposed of the writ application, making the rule absolute to the extent that the petitioner could now argue for the discharge of the show cause notice issued under Form GST-MOV-10. The judgment underscored the importance of authorities exercising discretion judiciously and in accordance with the provisions of the Act, ensuring that confiscation is not a knee-jerk reaction but based on genuine grounds and evidence of intent to evade tax.

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