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of <h1>Provisional release of seized goods under Section 67(6) allowed during pending Section 130 GST proceedings</h1> <h3>Shish Jewels Private Limited Versus The Intelligence Officer State Goods And Services Tax Department, Kochi, M/s. Dubai Gold And Diamonds, (Firdous Jewels And Diamonds Pvt Ltd.), The Commissioner Of State Tax, Thiruvananthapuram, The Intelligence Officer, State Goods And Services Tax Mattancherry.</h3> Kerala HC held that provisional release of goods under Section 67(6) of GST Act is permissible pending adjudication of Section 130 proceedings. The court ... Provisional release of the goods under Section 67 (6) of the GST Act pending adjudication of the notice under Section 130 - legality of the seizure order and the subsequent show cause notice issued u/s 130 of the GST Act - HELD THAT:- The question as to whether interim release of goods can be ordered pending adjudication of notice under Section 130 of the GST Act came up for consideration before this Court in Golden Traders [2022 (8) TMI 147 - KERALA HIGH COURT]. Distinguishing the judgment of the Hon'ble Supreme Court in Lexus Exports [1994 (1) TMI 153 - SUPREME COURT] and referring to the decision in Balakrishnan [2021 (12) TMI 123 - KERALA HIGH COURT], this Court held 'the petitioner is entitled to an order directing the release of goods pending adjudication of Ext.P9 notice. As a result, it is directed that pending adjudication of Ext.P9 notice, the goods and conveyance detained in terms of Expt.P9 order shall be released to the petitioner on the petitioner depositing a sum of Rs. 1,00,000/- (Rupees One Lakh Only) and furnishing a simple bond for the balance amount.' This Court, in Golden Traders [2022 (8) TMI 147 - KERALA HIGH COURT], has categorically held that there is no provision in Section 130 of the GST Act which prohibits the interim release of goods seized pending adjudication of show cause notice under Section 130. Section 130(7), therefore, provides an option to pay fine in lieu of confiscation even after the adjudication. The intention of the legislature is that the interest of the revenue is protected. The adjudication can be proceeded even if the goods are released pending adjudication. Even if confiscation is ordered, there is an option to the owner of the goods to pay fine in lieu of confiscation. Further, after the owner of the goods avails the option but refuse to make payment in lieu of confiscation, Section 130(6) permits the proper officer to withdraw the order of release and hold possession of the goods confiscated. The provisional release does not in fact result in loss of absolute custody by the Department over the goods seized, as the Department will still have constructive custody. The object of the provision is only to secure the value of the goods that are liable for confiscation and not to confiscate the goods as such. Therefore, even if goods are ordered to be released pending adjudication, no prejudice is caused to the Department, as the revenue is protected by the owner making payment in lieu of confiscation. The reason stated in Ext.P8 that there is no provision under Section 130 of the GST Act to order provisional release of goods pending adjudication of notice under Section 130 cannot be sustained. Conclusion - The provisional release of goods is permissible under Section 67(6) even after the initiation of Section 130 proceedings. The adjudication can be proceeded even if the goods are released pending adjudication. Petition disposed off. 1. ISSUES PRESENTED and CONSIDEREDThe judgment primarily addresses the following legal issues:Whether the petitioner is entitled to the provisional release of the seized goods under Section 67(6) of the GST Act pending adjudication of the notice under Section 130.Whether the issuance of a show cause notice under Section 130 of the GST Act prohibits the interim release of goods.The legality and justification of the seizure of goods by the GST authorities.The applicability of precedents and legal principles regarding the provisional release of goods under the GST framework.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Provisional Release of Goods under Section 67(6) of the GST ActRelevant Legal Framework and Precedents: Section 67(6) of the GST Act allows for the provisional release of seized goods upon execution of a bond and furnishing of security. The petitioner relies on precedents such as Golden Traders v. Assistant State Tax Officer and Dhanlaxmi Metals v. State of Gujarat to argue for provisional release.Court's Interpretation and Reasoning: The court held that Section 130 does not prohibit the interim release of goods pending adjudication. It emphasized that the intention of the legislature is to protect the revenue, not to indefinitely hold goods.Key Evidence and Findings: The petitioner provided delivery challans and argued that the goods were legitimately accounted for. The court found no contravention of the GST Act that would justify continued seizure.Application of Law to Facts: The court applied Section 67(6) to allow provisional release, finding that the petitioner's offer to execute a bond and provide security was sufficient to protect the revenue.Treatment of Competing Arguments: The respondents argued that Section 130 proceedings preclude provisional release. The court rejected this, citing the absence of a statutory prohibition and the need to protect business interests.Conclusions: The court concluded that the petitioner is entitled to provisional release of goods pending adjudication, subject to conditions protecting the revenue.Issue 2: Legality of Seizure and Show Cause Notice under Section 130Relevant Legal Framework and Precedents: Section 130 deals with the confiscation of goods for contraventions intended to evade tax. Precedents like State Tax Officer v. Balakrishnan were considered.Court's Interpretation and Reasoning: The court found that the seizure was not justified as the goods were accompanied by valid documents and there was no intent to evade tax.Key Evidence and Findings: The court noted the absence of evidence showing intent to evade tax and the proper documentation of goods.Application of Law to Facts: The court applied the principles of Section 130 and found that the seizure and show cause notice were not warranted.Treatment of Competing Arguments: The respondents' reliance on the show cause notice was deemed insufficient to justify the seizure. The court emphasized procedural fairness and the need for evidence of contravention.Conclusions: The court held that the seizure was unjustified and the petitioner was entitled to relief, including provisional release of goods.3. SIGNIFICANT HOLDINGSVerbatim Quotes of Crucial Legal Reasoning: 'There is no provision in Section 130 of the GST Act which prohibits the interim release of goods seized pending adjudication of show cause notice under Section 130.'Core Principles Established: The judgment affirms that Section 67(6) allows for provisional release of goods to protect business interests and revenue. It also clarifies that Section 130 proceedings do not inherently preclude such release.Final Determinations on Each Issue: The court ordered the provisional release of goods upon the petitioner depositing a specified amount and executing a bond. The legality of the seizure and show cause notice was left open for further adjudication.The judgment underscores the balance between protecting revenue interests and ensuring procedural fairness in the application of GST laws. It highlights the importance of allowing businesses to operate without undue hindrance while ensuring compliance with tax regulations.
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