2023 (8) TMI 523 - HC - GST

HC orders reexamination of tax evasion under Sections 129 and 130 of CGST/KGST Act; confiscation stay granted

The HC directed the Assistant Commissioner of Commercial Taxes to reexamine whether the petitioner, as the registered vehicle owner, connived with the ... Confiscation of vehicle - evasion of tax - it is alleged that the petitioner had connived with the transporter to avoid tax - HELD THAT:- The connivance by the petitioner, who is the registered owner of the subject vehicle with the transporter in tax evasion could be a jurisdictional question for imposition of a tax liability either under Section 129 or 130 of the CGST/KGST Act. There must be complete adjudication on such question in a manner that would pass muster in law before other questions are examined. As such, this Court is of the considered opinion that the fifth respondent must reexamine the afore question with due opportunity to the petitioner to respond to the material that the fifth respondent may rely upon against the petitioner. This Court must observe that the fifth respondent, while deciding the question of connivance, may also take note of deliberate attempt, if any, to withhold the information. The petition stands disposed of observing that the impugned confiscation order dated 17.04.2021 [Annexure-D] will be subject to the outcome of the further enquiry by the fifth respondent – the Assistant Commissioner of Commercial Taxes, Enforcement as hereby permitted on the question of the petitioner’s connivance in tax evasion in the use of the subject vehicle during the relevant time - petitioner to avail due opportunity shall, without further notice, appear before the fifth respondent on 13.03.2023. Issues:Challenge to confiscation order under Section 130 of GST Acts and Sections 129 and 130 of KGST/CGST Act.Analysis:The petitioner, the owner of a vehicle, challenged a confiscation order under Section 130 of the GST Acts and Sections 129 and 130 of the KGST/CGST Act. The petitioner's counsel clarified that the challenge was not to the statutory provisions but to the initiation of proceedings and the confiscation order itself. The petitioner contended that there was no connivance with the transporter in tax evasion, thus the vehicle should not be confiscated.The petitioner received a notice alleging connivance with the transporter to avoid tax, followed by a Revised Show Cause Notice. The petitioner responded, denying guilt of tax evasion and requesting the release of the vehicle. An application for rectification was filed, emphasizing the lack of connivance due to strict policy adherence regarding documentation for hired transporters. However, this application was not considered by the authorities.The Additional Government Advocate argued that the petitioner's affidavit merely stating ownership of the vehicle was insufficient to prove the absence of connivance. The court considered the need for a further inquiry to determine connivance, especially in light of the petitioner's claims and the possibility of deliberate information withholding. The court directed the authorities to reexamine the question of connivance, allowing the petitioner an opportunity to respond to any material against them.Ultimately, the court disposed of the petition, subjecting the confiscation order to the outcome of further inquiry by the authorities regarding the petitioner's alleged connivance in tax evasion. The petitioner was instructed to appear before the authorities for this purpose, providing all necessary materials to support their case. The authorities were directed to consider all circumstances and deliberate attempts to withhold information while reexamining the question of connivance.