Person paying under Section 129(1)(a) for goods release retains right to appeal against detention proceedings

The Kerala HC held that a person who opts to make payment under Section 129(1)(a) of CGST/SGST Acts to secure release of detained goods retains the right to file an appeal against the proceedings. The court ruled that officers must pass orders under Section 129(3) and upload summaries in Form MOV-7 regardless of whether payment is made under Section 129(1)(a) or security provided under Section 129(1)(c). The court emphasized that depriving appeal rights would violate Article 265 of the Constitution, and the absence of system-generated demands cannot eliminate statutory appeal rights. The petition was allowed.

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Issues:
Whether a person who opts to make payment in terms of Clause (a) of Sub-Section (1) of Section 129 of the Central Goods & Services Tax Act / State Goods & Services Tax Act is deprived of the right to file an appeal against the proceedings.

Analysis:

Issue 1: Right to File Appeal
The main issue in this case was whether a person who opts to make payment under Section 129(1)(a) of the CGST/SGST Acts is deprived of the right to file an appeal against the proceedings. The petitioners argued that they should not be deprived of this right, while the State contended that all proceedings are concluded upon payment under Section 129(1)(a) as per sub-section (5) of Section 129.

Detailed Analysis:
The judgment highlighted that the provisions of Section 129 of the CGST/SGST Acts deal with the detention, seizure, and release of goods, conveyance, and documents. It emphasized that whether a person chooses to make payment under Section 129(1)(a) or provide security under Section 129(1)(c), the officer detaining or seizing goods must issue a notice specifying the tax and penalty payable. The judgment referred to Rule 142(5) of the CGST/SGST Rules, which mandates the uploading of a summary of the order in Form DRC-07 for various sections, including Section 129. The circular No.41/15/2018-GST dated 13.04.2018 also outlined the procedure for releasing goods upon payment of tax and penalty under Section 129(1)(a).

The judgment concluded that the responsibility of the officer to pass an order under sub-section (3) of Section 129 and upload a summary of the order/demand in Form DRC-07 continues regardless of whether payment is made under Section 129(1)(a) or security is provided under Section 129(1)(c). It emphasized that the right to challenge proceedings under Section 129 before the Appellate Authority under Section 107 remains intact for the person subject to such proceedings. The judgment clarified that the system's failure to generate a demand or allow an appeal without a demand does not alter the legislative intent to provide the right to file an appeal under Section 107 for aggrieved parties.

In conclusion, the writ petitions were allowed, granting the petitioners the right to file an appeal under Section 107 of the CGST/SGST Acts. The judgment directed the concerned respondents to take necessary actions within one month and recommended the issuance of a circular by the Commissioner of the State Goods & Services Tax Department to prevent similar issues in the future.

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