2020 (8) TMI 206 - HC - GST

Court Invalidates Detention Order & Notice, Stresses Compliance with GST Act Sections

The court ruled in favor of the writ applicant, finding the detention order under Section 129(1) of the GST Act illegal and non-compliant with procedural ... Release of detained goods alongwith truck - Section 129 and 130 of CGST Act - HELD THAT:- While issuing notice, this Court directed that the vehicle as well as the goods be released, upon payment of the tax, in terms of the impugned notice. The writ applicant availed the benefit of the interm-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. The proceedings shall go ahead in accordance with law - reliance can be placed in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT [2020 (2) TMI 1159 - GUJARAT HIGH COURT]. It is now for the applicant to make good his case that the show cause notice, issued in GSTMOV-10, deserves to be discharged - petition disposed off. Issues Involved:1. Legality of the order of detention under Section 129(1) of the GST Act.2. Validity of the notice for confiscation of goods and levy of penalty under Section 130 of the GST Act.3. Compliance with procedural requirements under Sections 129 and 130 of the GST Act.4. Interim relief for the release of goods and conveyance.5. Applicability of judicial precedents on the interpretation of Sections 129 and 130.Detailed Analysis:1. Legality of the order of detention under Section 129(1) of the GST Act:The writ applicant challenged the detention order of goods and conveyance under Section 129(1) of the GST Act, arguing that the actions of the respondent were 'absolutely illegal, unlawful, contrary to the facts and evidence on record, violative of principles of natural justice and against the provisions of the Act and Rules framed thereunder.'2. Validity of the notice for confiscation of goods and levy of penalty under Section 130 of the GST Act:The applicant contended that the notice issued under Section 130 for confiscation and penalty was not permissible without initiating proceedings under Section 129. The court noted that the impugned notice had various blanks, indicating non-compliance with the procedural requirements.3. Compliance with procedural requirements under Sections 129 and 130 of the GST Act:The court emphasized that the proper officer must issue a notice specifying the tax and penalty payable and provide an opportunity for a hearing before passing an order under Section 129. The court referenced the case of Synergy Fertichem Pvt. Ltd. v. State of Gujarat, highlighting that authorities often bypass Section 129 and directly invoke Section 130, which is not justified without a strong case indicating intent to evade tax.4. Interim relief for the release of goods and conveyance:The court, while issuing notice, directed the release of the vehicle and goods upon payment of the tax amount as per the impugned notice. The writ applicant availed this interim relief and got the vehicle and goods released.5. Applicability of judicial precedents on the interpretation of Sections 129 and 130:The court allowed the applicant to rely on the observations from the Synergy Fertichem case, which discussed the necessity of examining the nature of contravention and intent to evade tax before invoking Section 130. The court clarified that not every contravention justifies invoking Section 130 and that authorities must record reasons for such belief in writing.Conclusion:The writ application was disposed of with the court making the rule absolute to the extent that the applicant can challenge the show cause notice issued in GSTMOV-10. The proceedings shall continue in accordance with the law, and the applicant is permitted to present arguments based on the judicial precedents discussed.