2022 (4) TMI 1294 - HC - GST

Court Examines Mandatory Procedures for Goods Confiscation Under GST Act Sections 129 and 130

RAJKAMAL METAL AND ALLOYS Versus STATE TAX OFFICER, MOBILE SQUAD

Gujarat HC examined a writ application challenging a show-cause notice for confiscation of brass scrap under GST Act Section 130. The applicant contended ... Confiscation of goods - issuance of notice under Section-130 of the Act and applicability of Sub-section (3) of Section-129 of the Act - HELD THAT:- The larger issue raised in this writ-application, shall be decided. However, the exact amount payable by the writ-applicant in terms of Sub-section (3) of Section 129, is to be known. The possibility of ordering provisional release of the goods on the condition that the writ-applicant shall deposit the entire amount towards penalty, is being explored. There is some confusion as regards the exact amount due and payable towards penalty. Clarification is required regarding the figure. Issue notice to the respondents returnable on 20.04.2022 - On the returnable date, notify this matter on top of the board. Issues Involved:1. Proper issuance of notice under Sections 129 and 130 of the GST Act for confiscation of goods and conveyance.Analysis:The judgment by the Gujarat High Court, delivered by Honorable Mr. Justice J.B.Pardiwala, and Honorable Ms. Justice Nisha M. Thakore, revolves around a case where a writ-applicant engaged in the business of metal scrap faced a show-cause notice for possible confiscation of goods under Section-130 of the GST Act. The applicant had entered into a sale transaction of brass scrap with a purchaser, dispatching two consignments with separate e-way bills. However, the goods were intercepted during transit, leading to the issuance of the notice. The key contention raised by the applicant's counsel was the alleged oversight of Sub-section (3) of Section-129, which mandates a specific procedure for issuing notices and determining penalties within a set timeframe post-detention or seizure.In response, the learned AGP representing the respondents argued that Sections 129 and 130 of the Act operate independently, implying that compliance with one section does not necessitate adherence to the provisions of the other. The debate centered on the interpretation of statutory provisions and the procedural requirements for confiscation under the GST Act. The applicant's counsel relied on a Karnataka High Court decision to support the argument that the notice under Section 129 cannot be disregarded when initiating proceedings under Section 130, emphasizing the need for a comprehensive and sequential approach to handling such cases.The High Court, while acknowledging the significance of the larger issue raised in the writ-application, expressed a need for clarity regarding the exact penalty amount payable by the applicant as per Sub-section (3) of Section-129. The court contemplated the potential provisional release of goods upon the deposit of the penalty amount, highlighting the importance of accurate financial assessments in such matters. Consequently, the court issued notice to the respondents for further proceedings, emphasizing the need for a meticulous examination of the legal and procedural aspects involved in the case.Overall, the judgment underscores the importance of procedural compliance and adherence to statutory provisions in matters concerning the confiscation of goods under the GST Act. It reflects a nuanced analysis of the interplay between Sections 129 and 130, emphasizing the need for a coherent and legally sound approach in addressing issues related to detention, seizure, and potential confiscation of goods and conveyance under the GST framework.