2024 (2) TMI 417 - HC - GST

GST Dispute Resolved: Petitioner Must Deposit 25% Cash, Provide Bank Guarantee to Challenge Penalty Notices

M/s. Kanchan Supplier through its Proprietor Versus State of Punjab and others

The HC partially allowed the writ petition challenging GST notices and penalties. The court directed the petitioner to deposit 25% of the total amount in ... Detention of goods u/s 130 of the Central Goods Service Tax/Punjab Goods Service Tax Act, 2017 - HELD THAT:- It is not disputed that the petitioner as such is a proprietorship concern which is situated in the State of Uttar Pradesh. Vide the order dated 18.01.2024 passed by the authorities, a specific finding has been recorded that the supply chain of the petitioner-firm has been verified to be ingenuine and on the purchases which they have made at an earlier point of time, the said persons have not paid any tax. In such circumstances, a finding has been recorded that there are bogus transactions made for defrauding the exchequer. In view of the fact that a prima facie finding has already been recorded, which the petitioner is free to challenge, it is opined that deposit of 25% of the amount by cash and for balance furnishing of bank guarantee would be the adequate remedy as such to ensure that the interest of the State is secured as it would be almost impossible to enforce the surety bonds of a person who does not belong to this State. The writ petition is disposed off with liberty to the petitioner to challenge order dated 18.01.2024 passed in Form GST MOV-11. The vehicle and the goods shall be released on furnishing of 25% of the amount mentioned in MOV-11 order and the balance outstanding amount shall be secured by furnishing of a bank guarantee. Issues involved: Quashing of notice under GST Act, imposition of penalty and fine, validity of order, remedy available to petitioner, jurisdiction of the court.Quashing of notice under GST Act:The petitioner sought quashing of the notice in Form GST MOV-02 and Form GST MOV-10 passed by the respondent under Section 130 of the Central Goods Service Tax/Punjab Goods Service Tax Act, 2017, alleging it to be without jurisdiction.Imposition of penalty and fine:An order was passed to confiscate goods and vehicle, with penalty and fine imposed under Sections 130(1) and 130(2) of the Act, amounting to Rs. 5,33,004/- against the value of goods of Rs. 9,87,044/-.Validity of order and available remedy:The court noted that an appeal lies before the Appellate Authority against the order. Reference was made to a Supreme Court order accepting depositing 25% of the total amount by cash and furnishing a personal surety bond for the remaining amount.Jurisdiction of the court:Considering the petitioner's location in Uttar Pradesh, a finding was made that the supply chain was verified as ingenuine, involving bogus transactions to defraud the exchequer. The court held that depositing 25% of the amount by cash and furnishing a bank guarantee would secure the state's interest, in line with legal precedent.Validity of order and remedy granted:Citing legal precedent, the court disposed of the writ petition, allowing the petitioner to challenge the order dated 18.01.2024. The release of the vehicle and goods was conditioned upon furnishing 25% of the mentioned amount in the order and securing the balance with a bank guarantee. The court rejected the argument that a local consignee could furnish surety bonds, as the consignee was not present before the court.