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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
N.S. Sanjay Gowda, J.
M/s Rajeev Traders, Represented By Its Proprietor, Sri. Rajeev Ranjan - Petitioner
Versus
Union of India, Through Its Secretary, Ministry of Finance, Department of Revenue, Room No.137, North Block, New Delhi and ors. – Respondents
Writ Petition No.100849 of 2022 (TRES)
Decided On : 16-08-2022
Central Goods and Services Tax Act, 2017 - Section 129, (1), (a), 130, 107, (11), 112, (1), 35, 68, 73, 74, 67, 128, 122, (1) (xiv), 130, 31, 15 - Central Goods and Services Tax Rules, 2017 - Rule 138A, 46, (g) to (m), 54 - Inspection of Goods - Difference in Quantity - Whether the Proper officer, while detaining the goods which are in transit in the exercise of his power under Section 129 of the Act, possess the power to initiate proceedings to confiscate under Section 130 of the Act and thereafter conduct an enquiry and proceed to order confiscation of the goods. [Para 24]
Finding of the Court: In a proceeding under Act, market value of goods are not relevant unless in certain specified circumstances - For all normal purposes, value would have to be determined as per Section 15 of Act which would be price actually paid or payable - It is to be borne in mind that there is no law which demands that supply of goods should be made only at a market value - In fact, in business, rate at which goods are supplied could vary depending on various factors and could not be determined uniformly - Therefore, entire basis that there was undervaluation was completely incorrect and consequential conclusion that there was undervaluation with an intent to evade payment of tax, cannot also be accepted - In Court view, entire procedure adopted by proper officer from converting detention proceedings into a confiscatory proceeding, ultimately leading to order of confiscation is wholly illegal and contrary to statutory scheme of Act - Appellate Authority has mechanically accepted reasoning of order of proper officer and has dismissed appeal without examining statutory scheme of Act – Court is therefore of view that impugned orders cannot be sustained and same are quashed - Question that is framed is accordingly answered in negative - Since it is stated that confiscated goods are already sold in a public auction, respondents are directed to pay petitioners, sale proceeds of auction after deducting penalty prescribed under Section 129(1)(a) of Act, within a period of four weeks from date of receipt of a certified copy of this order - It is however made clear that proper officer would be at liberty to initiate proceedings for determination of tax as provided under Section 73 or Section 74 of Act and passing of this order will not in any way be construed as an opinion rendered on merits of any of allegations made against petitioner.
Result: Petition allowed.
ORDER :
1. On the 13th of September 2021, at 5:00 PM, at Yamanuru, the Inspector of Hubballi Dharwad Division (Proper Officer) intercepted seven trucks while they were in transit and transporting Areca nuts on behalf of the petitioner. The Proper Officer intended to inspect the conveyance, goods and documents, and he accordingly passed an order for physical verification/inspection of the conveyance, Goods and documents on the same day and issued Form GST MOV-02.
2. In the said order, it was stated that the person in charge of the conveyance had not tendered any documents for the goods in movement and prima facie the documents tendered were found to be defective. The order also stated that the genuineness of the goods in transit, their quantity, etc., and/or the tendered documents required further verification. It was stated that the E-way bill had not been tendered for the goods in movement and therefore, the vehicle was to be stationed at Belagavi and allow the physical verification and inspection of the goods in movement.
3. On the 14.09.2021, the physical verification of the goods and conveyance was conducted in the presence of the person in charge of the goods vehicle and it was stated that the conveyance was carrying Areca nuts and there was a difference in the quantity mentioned in the invoice and the quantity found upon physical verification.
4. On the 28.09.2021, the officer passed an order of detention under Section 129 of the Central Goods and Services Tax Act, 2017 (for short ‘CGST Act’ / ‘the Act’ ) in Form GST MOV-06.
5. On the following day, i.e., on 29.09.2021, the Deputy Director, DGGI, Zonal Unit, Belagavi, proceeded to issue a notice for confiscation of goods, conveyances and levy of penalty under Section 130 of the CGST Act, in Form GST MOV-10.
6. To this notice, the petitioner submitted a reply dated 27.10.2021.
7. The Deputy Director after granting a personal hearing to the authorised representative of the petitioner, proceeded to pass an order of confiscation under Section 130 of the CGST Act on 24.11.2021 by issuing Form GST MOV-11.
8. Being aggrieved by the order of confiscation, the petitioner preferred an appeal to the Joint Commissioner, Office of the Commissioner of GST & Central Excise (Appeals), Belagavi, under Sub-section (11) of Section 107 of the CGST Act.
9. The Appellate Authority, on consideration of the appeal, concurred with the view taken by the Deputy Director and proceeded to dismiss the appeal.
10. As against the said order passed in appeal, though an appeal is provided to the appellate authority under Sub-section (1) of Section 112 of the CGST Act, since the Appellate Tribunal has not been constituted, the petitioner is before this Court by way of this writ petition.
11. The petitioner contends that once the goods in transit were detained under Section 129 of the CGST Act, the proper officer did not possess the power to initiate confiscation proceedings under Section 130 of the Act. It was submitted that once proceedings for the detention of the goods was initiated under Section 129 of the CGST Act, the same could not be transformed into a proceeding under Section 130 of the CGST Act. It was stated that the power of detaining the goods under Section 129 of the CGST Act is only for a limited period and if the owner of the goods or the person incharge of the goods comes forward to pay the tax and penalty, the proper officer was bound to release the detained goods and conveyance.
12. It was contended that the proper officer was required to issue a notice specifying the tax and penalty payable and thereafter pass the order for payment of tax and penalty and if such payment was made, the proceedings, in fact, are deemed to have been concluded. It was stated that only if the person transporting the goods or the owner of the goods fails to pay the tax and penalty as provided under Section 129(1) of the CGST Act, within 14 days, would the proper officer possess the power to initiate proceedings under Sec
Under Section 15 of the Act, the value of the supply of goods would be the transaction value and a transaction value would be the price that is paid or payable for the supply of goods.Q
Provisional release of goods pending confiscation is not authorized under Section 130 of the CGST Act; legal authority for property deprivation must follow specific statutory provisions.
The court established that confiscation under Section 130 requires prior action under Section 129, and adherence to natural justice is essential in such proceedings.
The main legal point established in the judgment is the independence of proceedings for detention of goods under Section 129 and confiscation of goods under Section 130 of the CGST/APGST Act, as expl....
Point of Law - Section 68 of the GST Act which empowers the authority concerned to intercept the vehicle and the goods. The said provision of Section 68 is required to be reproduced.
The main legal point established in the judgment is the requirement to follow the procedural provisions under Section 129 before invoking the order of confiscation under Section 130 of the SGST Act, ....
Point of law: The extraordinary powers under Article 226 of the Constitution, directing for release of the vehicles or goods, during the pendency of the confiscation, can only be sparingly exercised ....
Section 129 forms part of the machinery provisions under the Act to check evasion of tax and a detention can be justified only if there is a contravention of the provisions of the Act in relation to ....
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