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2024 Supreme(Online)(Ker) 63729
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 1ST DAY OF MARCH 2024 / 11TH PHALGUNA, 1945 WP(C) NO. 24387 OF 2023 PETITIONER:
THE JOINT COMMISSIONER OF STATE TAX (I&E), ERNAKULAM, STATE GOODS AND SERVICES TAX DEPARTMENT, GOVERNMENT OF KERALA, EDAPPALLY, ERNAKULAM, PIN -
682024 BY ADV GOVERNMENT PLEADER RESPONDENT/S:
SASI PATHIRAKUNNATH, PROPRIETOR, A ONE GOLD, TC-26/289-1, MYLIPADAM, CHEMBUKKAVU.P.O., THRISSUR, PIN - 680020 BY ADV TOMSON T.EMMANUEL MOHAMMED RAFIQ-SPL.G.P (TAXES)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
01.03.2024, ALONG WITH WP(C) NO. 38455/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH FRIDAY, THE 1ST DAY OF MARCH 2024 / 11TH PHALGUNA, 1945 WP(C) NO. 38455 OF 2023 PETITIONER:
THE JOINT COMMISSIONER OF STATE TAX (I&E), ERNAKULAM, STATE GOODS AND SERVICES TAX DEPARTMENT, GOVERNMENT OF KERALA , EDAPPALLY , ERNAKULAM, PIN - 682024 BY ADV GOVERNMENT PLEADER RESPONDENT:
M/S SHINE JEWELLERY, DOOR NO. V/255, MAIN ROAD , KOORKENCHERY CENTER, THRISSUR, PIN - 680007 BY ADV TOMSON T.EMMANUEL MOHAMMED RAFIQ-SPL.G.P (TAXES)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
01.03.2024, ALONG WITH WP(C)NO.24387/2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
‘ CR ’
The appellate authority has the power to modify penalties in confiscation cases under the CGST Act as long as the original discretion by the adjudicating authority is not arbitrary or unreasonable.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Sections 107 and 130 - Challenge to appellate order regarding confiscation of goods without required documentation - The respondent transported gold without valid documents, leading to confiscation; the appellate authority reduced the penalty significantly. The adjudicating officer's findings based on the absence of required documents for 724.99 grams were upheld by the appellate authority validating the confiscation. (Paras 1-5, 19-24)
(B) Appellate Authority’s Discretion - The court ruled that the appellate authority does have the power to modify the penalty assessed by the adjudicating authority provided it finds the original discretion to be arbitrary or unreasonable. (Paras 26-40)
Facts of the case:
A writ petition was filed against the appellate authority's order that reduced the penalty for confiscation of gold ornaments. The gold was not accompanied by valid transport documents, leading to its confiscation under the provisions of the CGST Act. The initial penalty was set at a significant market value which was later reduced by the appellate authority.
Findings of Court:
The appellate authority upheld the validity of confiscation but modified the penalty amount. The court found no reasonable grounds to interfere with the appellate authority's decision.
Issues: Whether the appellate authority had the jurisdiction to modify the penalty imposed by the adjudicating officer and the validity of the confiscation order.
Ratio Decidendi: The court confirmed that the appellate authority can modify penalties as long as the discretion of the adjudicating authority is not misconstrued. The factors surrounding the transaction and compliance with documentation were essential in this judgment.
Result: Writ petitions dismissed without costs.
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
