High Court: Confiscation notice under CGST Act quashed. Route deviation not enough for confiscation.

The High Court of Gujarat ruled in favor of the petitioners, a seller of goods and the owner of a transporting truck, in a case challenging a confiscation notice under the CGST Act. The Court held that mere route deviation and undervaluation, without evidence of tax evasion, do not justify confiscation. It emphasized that confiscation should be based on concrete evidence of tax evasion, not procedural deviations. As no substantial evidence of tax evasion was presented, the confiscation proceedings were quashed, and the goods and vehicle were ordered to be released to the petitioners.

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Issues:
Challenge to confiscation notice under CGST Act, direction for release of goods and vehicle, grounds of interception and discrepancies in notice, legal validity of detention based on route change and undervaluation, reliance on case laws, objection to grant of relief, consideration of facts and circumstances, decision on quashing confiscation proceedings.

Analysis:
The High Court of Gujarat heard a writ application challenging a confiscation notice issued under the Central Goods and Services Tax Act, 2017 (CGST Act) and seeking the release of goods and a vehicle without demanding security. The petitioners, a seller of goods and the owner of the transporting truck, were aggrieved by the interception of their consignment and the issuance of Form GST MOV-10 by the tax authorities. The notice alleged discrepancies related to the direction of travel and undervaluation of the goods.

The petitioners contended that the grounds for confiscation were legally untenable, citing precedents where mechanical detention of goods solely based on route deviation or undervaluation was deemed impermissible. They argued that undervaluation should not lead to confiscation but should prompt separate proceedings under the law. The respondents, however, objected to the relief sought, claiming that the route change indicated an intention to evade tax.

Upon careful consideration, the Court found merit in the petitioners' arguments. It ruled that mere change of route or undervaluation, without additional evidence of tax evasion, cannot justify confiscation. The Court emphasized that route deviation or undervaluation alone do not warrant detention or confiscation of goods in transit. As no substantial evidence of tax evasion was presented, the confiscation proceedings were quashed, and the goods and vehicle were ordered to be released to the petitioners.

The Court clarified that while a change of route might be significant if supported by evidence of tax evasion, in this case, such evidence was lacking. Undervaluation alone was also deemed insufficient for confiscation. The ruling highlighted that confiscation should be based on concrete evidence of tax evasion, not mere procedural deviations. Ultimately, the Court allowed the writ application, quashing the confiscation proceedings and directing the immediate release of the goods and vehicle to the petitioners.

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