Petitioner fails to quash Section 130 CGST show cause notice but secures interim goods release on deposit and bond conditions

The Kerala HC rejected the petitioner's challenge to quash a show cause notice under Section 130 of CGST Act for goods transportation without valid documents, holding that notice validity need not be examined at this stage. However, the court distinguished customs law precedents and ruled that interim release of detained goods is permissible under CGST provisions since absolute confiscation doesn't apply to domestic transactions. The court directed release of goods and vehicle pending adjudication upon deposit of Rs.1,00,000 and furnishing bond for balance amount, emphasizing revenue protection through conditions rather than continued detention.

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Issues:
1. Validity of show cause notice issued under Section 130 of the CGST Act.
2. Entitlement to interim release of goods pending adjudication of the notice under Section 130 of the CGST Act.

Issue 1: Validity of show cause notice under Section 130 of the CGST Act:

The petitioner, a registered dealer under Goods & Services Tax enactments, was transporting areca nuts when intercepted by the respondent for alleged lack of valid documents. The respondent issued notice in form GST-MOV-10 under Section 130 of the CGST Act, calling for a show cause on confiscation of goods and conveyance. The petitioner challenged the notice as illegal and arbitrary, while the respondent argued that such notices are non-interferable under Article 226 of the Constitution. The court held that the notice, being a show cause notice, need not be considered for quashing under Article 226. The court noted differing views on proceedings under Section 129 and 130 but decided not to delve into it, as the notice was issued post-physical verification. The court rejected the plea to quash the notice, citing that statutory remedies' existence made further consideration unnecessary.

Issue 2: Entitlement to interim release of goods pending adjudication under Section 130 of the CGST Act:

The court analyzed whether the petitioner could seek interim release of goods pending adjudication under Section 130 of the CGST Act. While the respondent cited precedents like Lexus Exports case, the court found it inapplicable to the present matter. The court emphasized that Section 130 does not prohibit interim release of detained goods during proceedings. Referring to a previous judgment, the court highlighted that Section 130(2) allows release on payment of fine before confiscation orders. The court differentiated a Karnataka High Court case, emphasizing the distinct nature of release under Section 130(2). The court upheld the petitioner's entitlement to goods' release pending adjudication, subject to a deposit and bond requirement. The court disposed of the writ petition, directing the release of goods upon specified conditions.

This detailed analysis of the judgment addresses the validity of the show cause notice under Section 130 of the CGST Act and the entitlement to interim release of goods pending adjudication, providing a comprehensive overview of the legal arguments and court's reasoning in each issue.

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