2023 (5) TMI 643 - HC - GST

Judicial Review Upholds Taxpayer Rights: GST Authority Order Challenged with Conditional Interim Relief Under Sections 129 and 130

The HC examined the validity of a GST authority's order under Sections 129 and 130 of the Central GST Act. The court granted interim relief for goods and ... Seeking release of goods alongwith conveyance - absence of E-way bill - different destination was indicated in the invoice from what was mentioned by the driver - HELD THAT:- It is directed that the goods of the petitioner as well as vehicle bearing registration KA 14C 3377, shall be released provided the petitioner complies with the conditions imposed - petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether seizure of goods and conveyance intercepted in transit under Section 129 of the Central Goods and Services Tax Act, 2017 can be followed by invocation of Section 130 without first affording the procedural and substantive consequences/benefits available under Section 129, and whether such switching renders the subsequent order under Section 130 without jurisdiction. 2. Whether interim release of seized goods and conveyance is permissible pending adjudication where seizure arose from alleged transit irregularities (absence of e-way bill and mismatch of destination), and if so, on what conditions such release may be granted to adequately protect revenue interests. 3. Whether payment of tax is a precondition for interim release when authorities have not assessed the tax at the time of seeking release. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality of invoking Section 130 after seizure under Section 129; effect of non obstante clause and jurisdictional limits Legal framework: Section 129 provides specific powers on interception of goods in transit including seizure, release on payment/conditions, and procedural safeguards; it contains a non obstante clause indicating its independent operation. Section 130 deals with confiscation/penalty for offences under the Act and allows formal orders of confiscation and imposition of fines. Precedent Treatment: The Court noted that similar factual matrices have been considered in earlier petitions and interim reliefs were granted in comparable circumstances; those orders were relied on by the petitioner in support of the contention (treatment: followed as persuasive practice in like cases). Interpretation and reasoning: The Court acknowledged the petitioner's submission stressing the independence of Section 129 (by reason of the non obstante clause) and that benefits available under Section 129 (including release on conditions) ought not to be bypassed by immediately invoking Section 130. However, rather than declaring the subsequent Section 130 order per se void for lack of jurisdiction, the Court balanced the statutory scheme and facts: it recognized the distinct statutory domains but exercised its discretionary jurisdiction to grant interim release subject to protective financial and procedural conditions. The Court thus treated the two sections as distinct yet not wholly mutually exclusive in the interim relief context, focusing on safeguarding revenue while protecting the petitioner's rights pending adjudication. Ratio vs. Obiter: Ratio - A Section 130 order following seizure under Section 129 is not automatically immune from judicial scrutiny; interim relief can be granted where appropriate safeguards protect revenue, even if authorities have invoked Section 130 after interception under Section 129. Obiter - Detailed doctrinal hierarchy between Sections 129 and 130 and the full consequences of invoking one provision after the other in final adjudication were not exhaustively determined. Conclusion: The Court did not hold automatic invalidity of invoking Section 130 after Section 129 seizure but indicated that exercise of power must be subject to judicial oversight; interim relief is permissible where conditions satisfactorily protect revenue and ensure cooperation in adjudication. Issue 2: Conditions for interim release of seized goods and conveyance where transit irregularities exist (absence of e-way bill, mismatch of destination) Legal framework: The Act permits seizure and confiscation for transit violations; courts have jurisdiction to grant interim relief with conditions to secure revenue pending adjudication. Precedent Treatment: The Court relied on prior orders in similar factual situations (treated as persuasive precedents for conditioning release), adopting analogous protective measures. Interpretation and reasoning: Given the allegations (no e-way bill; destination mismatch creating suspicion), the Court balanced the competing interests - protecting revenue versus preventing undue deprivation before adjudication. The Court imposed monetary deposits and security (penalty deposit, bank guarantee for a percentage of fine in lieu of confiscation, bond for remaining percentage), and required an oath undertaking disclosing registered office and cooperation in adjudication. The Court expressly allowed adjustment if amounts already paid, and clarified that tax payment condition was omitted because tax had not been assessed. These conditions were calibrated to (a) preserve the revenue by securing substantial financial exposure, (b) discourage flight or dissipation of assets, and (c) ensure cooperation in the pending adjudicatory process. Ratio vs. Obiter: Ratio - Interim release of seized goods and vehicle can be granted on strict conditions including deposit of penalty, bank guarantee and bond for fine in lieu of confiscation, and an undertaking to cooperate; non-compliance will render the interim relief liable to be vacated. Obiter - Specific percentage split for bank guarantee (75%) and bond (25%) and the exact amounts imposed are case-specific measures and not enunciated as universal formulae for all cases. Conclusion: Interim release is permissible when stringent financial and procedural conditions are imposed that sufficiently protect the revenue and ensure the party's presence and cooperation in adjudication; failure to comply with conditions will result in vacation of interim relief. Issue 3: Requirement of tax payment for interim release where tax has not been assessed Legal framework: The statutory scheme contemplates payment/assessment of tax as part of enforcement; however, interim judicial relief often considers whether tax assessment exists before mandating payment as a condition of release. Precedent Treatment: The Court noted and followed practice in prior similar petitions where tax payment was not insisted upon when authorities had not assessed tax. Interpretation and reasoning: The Court clarified that since the authorities had not assessed tax in the present matter, the condition of payment of tax was not imposed among release conditions. Instead, the Court required deposit of penalties and securities tied to potential confiscation and penalty amounts. This approach recognizes that requiring tax payment before assessment would be premature, while still securing revenue interests through other monetary conditions. Ratio vs. Obiter: Ratio - Payment of tax is not a necessary precondition for interim release where tax is unassessed; courts may condition release on other security measures. Obiter - How courts should balance tax payment versus alternative securities in different factual matrices remains to be shaped by future adjudications. Conclusion: The absence of tax assessment precluded imposing tax payment as a release condition; protective monetary securities and undertakings were appropriate substitutes to protect revenue pending adjudication. Cross-references and Operational Conclusions The Court's orders in related matters were treated as persuasive and the present interim relief was fashioned in line with those precedents (see Issue 2). The operative conclusion is that interim release of goods and vehicle seized in transit may be granted despite invocation of Section 130 after Section 129 seizure, provided the releasing court imposes conditions (monetary deposits, bank guarantees, bonds, sworn undertakings of address and cooperation) adequate to secure the revenue and ensure participation in adjudication; non-compliance will result in vacatur of the interim relief.