GST Authorities Must Release Detained Cumin Seeds When Petitioner Provides Bank Guarantee and Bond for Full Value

The HC directed GST authorities to release detained cumin seeds and transport vehicle upon the petitioner providing a bank guarantee of Rs. 3.75 lacs (covering potential tax of Rs. 1.24 lacs plus maximum 200% penalty) and a bond for the full value of goods (Rs. 24.84 lacs). The court reasoned that continuing detention served no purpose as long as tax liability was secured, especially considering the perishable nature of the goods. The authorities retained the right to conduct assessment after proper notification, with the petitioner's final liability subject to appeal rights.

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Issues:
Petition to quash notice and detention order by State GST authorities regarding a consignment of cumin seeds in transit.

Analysis:
The petitioner sought to quash a notice and detention order issued by the State GST authorities concerning a transport truck carrying a consignment of cumin seeds. The consignment, originating from Gujarat and destined for Uttar Pradesh, was intercepted in Jaipur due to the driver lacking valid documents. The petitioner argued that the goods and vehicle were seized unjustly, prompting the petition.

The court opined that, pending assessment, the authorities should release the vehicle and goods under certain conditions within their powers under the State GST Act. The department's objective might be to tax the goods and levy the maximum penalty. However, as long as these amounts are secured, taxing the goods in the vehicle would serve no purpose, especially considering the perishable nature of the goods and the stranded transport vehicle.

The court was informed that the goods' value was approximately Rs. 24.84 lacs, with an applicable tax of around Rs. 1.24 lacs. Taking into account a 200% maximum penalty on the basic tax amount, the total amount, including possible tax and the highest penalty, would be Rs. 3.75 lacs.

Consequently, the respondents were directed to release the goods upon the petitioner either depositing or furnishing a bank guarantee of Rs. 3.75 lacs before the concerned authority, in addition to providing a bond for the full value of the goods. Once these conditions were met, the vehicle and goods were to be released immediately. The GST authorities were permitted to conduct an assessment after notifying the petitioner, with the petitioner's liability determined based on such assessment, subject to the right of appeal.

With these directives, the petition was disposed of by the court.

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