2024 (1) TMI 572 - HC - GST

Vehicle Seizure Under GST Act Overturned: Procedural Fairness Mandates Hearing and Reasoned Review of Penalty Order

HC ruled that vehicle seizure under GST Act was procedurally improper. Court directed authorities to provide petitioner an opportunity to be heard, ... Seizure of Vehicle - penalty order passed in ex-parte - no SCN issued to the petitioner to show cause why the truck in question may not be seized - violation of principles of natural justice - HELD THAT:- By virtue of the statutory law, the petitioner may not be entitled to release of the truck unless he deposits Rs. One lakh as provided under proviso-1 of Section 129 (6) of the Act. In such facts, it appears that the petitioner is entitled to one opportunity of hearing before the authority to furnish his explanation and to establish the fact that there was no connivance of the petitioner or no active role played by the petitioner in the illegality that are attributed to the dealer viz-a-viz the goods being transported on the truck in question. At present, the penalty order does not appear to bring out any conduct of the petitioner as may indicate or establish collusion between the petitioner and the importing dealer M/s Royal India Enterprises. Truck being the valuable property and a capital asset of the transporter which is utilised to generate revenue/ income, we perceive valuable civil right of the petitioner having being adversely affected exparte. In so far as no opportunity of hearing has been granted to the petitioner before the truck has been seized and since amount of Rs. One lakh has otherwise become due for release of the vehicle, the writ petition is disposed off - petitioner may treat the penalty order as the show cause notice and furnish reply to the Respondent No. 2 only for the purpose of obtaining release of the truck. Petition disposed off. Issues involved: Seizure of vehicle under Section 129 of the U.P. Goods and Services Tax Act, 2017 without issuing a show cause notice to the petitioner.The petitioner challenged the seizure of his vehicle, a TATA LPT 407 truck, under Section 129 of the U.P. Goods and Services Tax Act, 2017. The petitioner argued that no show cause notice was issued to him regarding the seizure of the truck, which was based on an ex-parte penalty order passed on MOV-09. The petitioner contended that he should have been given an opportunity to present his case before the truck was seized. The court noted that the penalty order did not establish any collusion between the petitioner and the dealer involved in transporting the goods on the truck.The court recognized that the truck was a valuable asset used by the petitioner to generate income. Considering the lack of opportunity for the petitioner to be heard before the seizure and the requirement of depositing Rs. One lakh for the release of the vehicle as per Section 129(6) of the Act, the court issued the following directions: (i) The petitioner could treat the penalty order as a show cause notice and reply to the Respondent No. 2 to secure the release of the truck. (ii) After receiving the reply/application from the petitioner, the respondent was directed to pass a reasoned order after providing a hearing to the petitioner. (iii) If the claim for release was rejected, the reasons for the decision were to be provided, allowing the petitioner to appeal. (iv) The entire process was to be completed within one week from the petitioner's compliance. (v) Importantly, the release of the truck would not impact the seizure of the goods or the penalty proceedings against the dealer, M/s Royal India Enterprises.