2022 (6) TMI 603 - HC - GST

Vehicle released under CGST Act Section 129(1) despite transaction doubts after driver produced required documents

HC allowed petition partially regarding vehicle release under CGST Act Section 129(1) for copper trading case. Despite doubts about transaction ... Detention of goods in transit - release of detained goods on deposit and furnishing of bond - adjudication under section 130 of the CGST Act (show-cause proceedings) - interim relief by application of judicial precedentDetention of goods in transit - release of detained goods on deposit and furnishing of bond - interim relief by application of judicial precedent - Petitioner entitled to the release of the detained vehicle and goods on specified interim terms without adjudication on the merits. - HELD THAT: - The Court noted that when intercepted the driver produced the documents required under the law and that MOV-06 recorded certain perceived discrepancies and historical transactions. Relying on the earlier Division Bench ratio and the parties' contentions, the Court declined to decide the merits of the detention under the CGST regime and instead directed interim release. The determinative order required the petitioner to deposit the tentative penalty amount reflected in the show-cause notice and to furnish a bond for the amount specified in MOV-10; upon compliance the authority was directed to release the vehicle and goods, without prejudice to the rights and contentions of the parties in the pending adjudication. The direction expressly preserves the authority's ability to continue adjudicatory proceedings under the applicable law. [Paras 12]Petition partly allowed; on deposit of the specified amount and furnishing of the specified bond the respondent-authority shall release the vehicle and goods, subject to ongoing adjudication.Adjudication under section 130 of the CGST Act (show-cause proceedings) - interim relief by application of judicial precedent - Proceedings under the show-cause notice (Form GST MOV-10) to continue; the Court did not adjudicate the merits and remanded the matter for further inquiry in accordance with law. - HELD THAT: - The Court recorded that similar reasons were reflected in MOV-10 and, having granted interim release on specified terms, directed that the inquiry and adjudication pursuant to the show-cause notice shall proceed in accordance with law. The decision preserves the authority's jurisdiction to decide the substantive allegations in the pending proceedings and confines the Court's order to interim relief. [Paras 12]The inquiry under Form GST MOV-10 shall proceed further in accordance with law; the interim release directed is without prejudice to the adjudication.Final Conclusion: Petition partly allowed: the detained vehicle and goods are to be released on payment of the tentative penalty and furnishing of the specified bond; the pending show-cause adjudication shall continue unimpaired and the Court has not gone into the merits. Issues Involved:1. Legality of the Order of Detention under Section 129(1) of the CGST Act.2. Validity of FORM MOV-10 issued under Section 130 of the CGST Act.3. Release of detained goods and conveyance without payment of penalty.4. Prohibition against further proceedings based on FORM MOV-10.Issue-wise Detailed Analysis:1. Legality of the Order of Detention under Section 129(1) of the CGST Act:The petitioner challenged the Order of Detention dated 28/04/2022 issued in Form GST MOV-06 by Respondent No. 4 under Section 129(1) of the CGST Act. The petitioner argued that the authority exercised powers not vested in it, as no contravention of the Act or Rules was found during the transit of goods. The petitioner cited the case of Majid Bilalbhai Akbani to support their claim that such detention was non-maintainable and without jurisdiction.2. Validity of FORM MOV-10 issued under Section 130 of the CGST Act:The petitioner sought to quash FORM MOV-10 issued by Respondent No. 4 on 06.05.2022, arguing it was passed without jurisdiction. The petitioner contended that the authority relied on past transactions from 2017-2021, for which no notices had been issued previously. The petitioner was willing to deposit Rs. 17 lacs as a penalty and furnish a bond of Rs. 65 lacs, subject to rights and contentions in the adjudication proceedings under Section 130.3. Release of detained goods and conveyance without payment of penalty:The petitioner requested the release of goods worth Rs. 1,08,60,957/- and the conveyance without payment of penalty. The court noted that the driver produced necessary documents during the interception, and the reasons for detention in MOV-06 included discrepancies like mismatch between goods and documents, and issues with the validity of input tax credit. The court directed the release of the vehicle and goods upon depositing Rs. 17 lacs and furnishing a bond of Rs. 65 lacs.4. Prohibition against further proceedings based on FORM MOV-10:The petitioner sought a writ to permanently prohibit Respondent No. 4 from proceeding further pursuant to FORM MOV-10. The court decided to allow the inquiry with respect to FORM MOV-10 to proceed in accordance with law, without delving into the merits of the case.Conclusion:The court allowed the petition partly, directing the release of the detained vehicle and goods upon fulfilling the specified conditions. The inquiry related to FORM MOV-10 was permitted to continue as per legal procedures. The petition was disposed of with the observation that the rights and contentions of the petitioner would be preserved for adjudication proceedings.