Seizure of gold ornaments upheld due to improper documentation under Section 129 GST Act

The HC dismissed a petition challenging seizure of gold ornaments and imposition of tax and penalty under Section 129 of the GST Act. The petitioner claimed goods were moved for sale on approval basis but could only produce a delivery note instead of the prescribed delivery challan required for movement of goods. The court held that no substitute exists for the prescribed delivery challan as per departmental circulars. The petitioner's voluntary written agreement to pay tax and penalty, without signing under protest, estopped him from later challenging the action. The court found no infirmity in the tax authorities' orders imposing liability for improper documentation during goods movement.

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Issues Involved:
1. Validity of the detention and seizure of goods.
2. Applicability of tax and penalty under Section 129 of the GST Act, 2017.
3. Adequacy of the opportunity provided to the petitioner to present their case.
4. Validity of documents accompanying the transported goods.
5. Alleged coercion in obtaining payment from the petitioner.

Summary:

1. Validity of the detention and seizure of goods:
The petitioner challenged the order dated 07.01.2020 by the State Taxes Officer (STO) and the order dated 31.08.2022 by the Deputy Commissioner, State Taxes, Appeals-I, Jammu. The STO intercepted a vehicle carrying gold ornaments worth Rs. 77,96,650.10/- under Section 68(3) of the J&K GST Act, 2017, and found that the goods were accompanied by a delivery note, which was not a valid document for the movement of goods. Consequently, the vehicle and goods were detained under Section 129(1) of the Act.

2. Applicability of tax and penalty under Section 129 of the GST Act, 2017:
The STO imposed a tax of Rs. 116,965.00 under State/UT Tax and CGST Act each, along with a penalty of Rs. 233,930/-. The petitioner appealed under Section 107 of the State/UT Goods and Services Act but the appellate authority dismissed the appeal, stating that the delivery note was not a prescribed document under the rules, and the STO's order was justified.

3. Adequacy of the opportunity provided to the petitioner to present their case:
The petitioner argued that the STO did not provide a proper and reasonable opportunity to present their case and failed to follow the procedure as per the GST Circular dated 13.04.2018. However, the appellate authority found no merit in these contentions and upheld the STO's order.

4. Validity of documents accompanying the transported goods:
The court examined Rule 55 of the J&K GST Rules, 2017, and found that the delivery note accompanying the goods was not a valid document. The petitioner argued that a letter from the consignor certifying the sale on approval basis was misplaced by the courier agency, but this was denied by the courier agency. The court concluded that the delivery note was neither prescribed nor mandatory, and the petitioner failed to produce a valid delivery challan.

5. Alleged coercion in obtaining payment from the petitioner:
The petitioner claimed that the STO obtained a cheque forcibly under the threat of dire consequences. However, the court noted that the petitioner had voluntarily agreed in writing to pay the tax and penalty, and the declaration made by the petitioner indicated no coercion. The court found this contention to be an afterthought and dismissed it.

Conclusion:
The court dismissed the writ petition, finding no infirmity in the impugned orders. The petitioner's failure to possess a valid delivery challan and the voluntary payment of tax and penalty were sufficient reasons for the dismissal. The court upheld the STO's and appellate authority's decisions, emphasizing the importance of adhering to prescribed documentation and procedures under the GST Act.

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