2023 (11) TMI 1155 - HC - GST

Ownership Documents Validate Areca Nuts Seizure Challenge, Penalty Orders Quashed Under Departmental Circular Guidelines

M/s S.V. Brothers Versus State of U.P. and Another

M/s S.V. Brothers Versus State of U.P. and Another - 2024 (81) G. S. T. L. 367 (All.) Issues involved:The petitioner challenged a seizure order and penalty order under the Central Goods and Services Tax Act, 2017, and sought to stop auction proceedings of the seized goods.Summary:Issue 1: Seizure and Penalty OrdersThe second respondent seized a consignment of Areca Nuts from a truck and declined to release the goods to the petitioner, levying a penalty under Section 129(1)(a) of the Act. The respondent found a variation in the description of goods, leading to doubts about ownership.Issue 2: Ownership of Seized GoodsThe petitioner argued that documents clearly identified them as the consignee, and physical verification matched the goods with the invoice. The petitioner cited a departmental Circular stating that the consignee should be treated as the owner when accompanying documents are present.Issue 3: Legal InterpretationThe Revenue contended that the petitioner fell under Clause (b) of Section 129(1) of the Act, supported by a previous judgment. However, it was acknowledged that the documents identified the petitioner as the consignee.Issue 4: Comparison with Previous CaseA previous case involving a non-existent firm was distinguished from the current situation where the petitioner's firm existed, albeit with a cancelled registration. The court emphasized that the intention to avoid tax did not negate the petitioner's ownership rights as per the Circular.Judgment:The court quashed the order rejecting the release of goods to the petitioner, directing a reconsideration based on the Circular and document examination. The petitioner was advised to pursue further remedies through the appeal process.