The appellate authority has the power to modify the fine imposed by the adjudicating authority under Section 130(2) of the CGST / SGST Act.

JUDGMENT :

The present writ petition has been filed challenging Ext.P2 appellate order passed by the Joint Commissioner (appeals) under the provisions of Central Goods and Services Tax / State Goods and Service Tax Act 2017 (‘the CGST / SGST Act’ for short) and Rules made thereunder. The State Tax Officer, Squad No.1 SGST Department Ernakulam, while conducting vehicle checking on 07.09.2021, received intimation from the Railway Protection Force, Ernakulam regarding the transport of gold by Mr. Nikhil Suresh without any documents as required under the provisions of CGST / SGST Act. On inspection, the carrier failed to produce documents to prove the genuineness of the gold ornaments under the transportation.

2. The railway protection team handed over the gold ornaments to the State Tax Officer and issued a summons. The statement of the carrier was recorded. After knowing the detention of the gold ornaments and issuance of notices to the respondent, the respondent appeared before the adjudicating officer and filed objections. However, the respondent failed to produce any documents. Hence, the State Tax Officer issued notices proposing to confiscate the gold ornaments transported without any document and impose the penalty as provided under Section 130 of the GST Act.

3.The State Tax Officer finalised the order of confiscation under Section 130 of the GST Act. The State Tax Officer held that there were no valid documents in respect of the gold ornaments transported at the time of detention. The State Tax Officer rejected the argument of the respondent that the soft copies of the bills were available with the carrier. It was also held that even the soft copies sent through whatsapp said to be accompanied with the gold ornaments was for 825 grams only, whereas the actually transported gold ornaments quantity was 724.99 grams, which would show that the documents produced had no connection with the gold ornaments transported. The State Tax Officer rejected the books of accounts produced, and held that same would not be treated as the reasons for regularizing the offfence. The order of confiscation was therefore, passed under Section 130 of the CGST / SGST Act, 2017. The respondent was also conveyed that the seized gold items will be released on payment of redemption fine equal to the market value of the goods seized with the penalty and fines as mentioned in the said order.

4.Challenging the said Ext.P1 order of confiscation, the respondent filed an appeal before the Joint Commissioner Appeals, the first appellate authority under Section 107 of the CGST / SGST Act. The appellate authority reduced the amount of fine in lieu of confiscation for release of gold to Rs. 4,03,672/-against Rs. 33,63,954/-on the premise that the respondent is a registered person who maintains proper books of accounts and files regular returns.

5.Mr. Mohammed Rafiq, Learned Special Government Pleader submits that Ext.P2 order is based on an irrelevant premise that the respondent is a registered person who maintains proper books of accounts and files returns. The reliance placed by the appellate authority upon an order of this court in State of Kerala v. Y Balakrishna, RP No. 630/2021, is wholly misplaced, inasmuch as the said order has not attained finality as W.A No. 1721/2021 filed against the same is pending before the division bench of this court. It is also submitted that Section 109 of the CGST/ SGST Act provides for the setting up of Tribunal to entertain appeals that can be filed under Section 112 from the first appellate orders. However, such a Tribunal is not yet constituted, and therefore, the petitioner has no other remedy than to approach this Court seeking to invoke its powers under Article 226 of the Constitution of India.

6.It is further submitted that the first appellate authority has failed to note that once the goods are confiscated, it become the property of the Government, and it is only the adjudicating authority who is empowered to decid