2019 (2) TMI 247 - HC - GST

Provisional release of goods - job-work - excess stock of finished goods found during search operations in the premises of job-worker - petitioner requested to provisionally release the finished goods which belonged to the principal suppliers and had to be returned at the earliest - subsection (6) of section 67 of the CGST Act - Held that - The manner has been prescribed under rule 140 of the CGST Rules, 2017 which provides that the seized goods may be released on a provisional basis upon execution of a bond for the value of the goods in FORM GST INS-04 and furnishing of a security in the form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable - Thus the respondents are duly empowered to provisionally release the seized goods, if the requirements of section 67 (6) of the CGST Act read with rule 140 of the CGST Rules are satisfied. The petitioner has already deposited ₹ 14,16,868/- by way of challan and has reversed credit of SGST to the tune of ₹ 7,90,793/-, which comes to approximately ₹ 22 lakhs. Under the circumstances, if the petitioner furnishes bank guarantee of ₹ 50 lakhs and a bond for the value of the goods in FORM GST INS-04, the interest of justice would be served - petition allowed in part.

Summary

Issues:
Challenge to validity of seizure orders and seeking provisional release of seized goods.

Analysis:
The petitioner challenged the validity of seizure orders dated 11/12.1.2018 and 14/15.3.2018, seeking the release of goods seized under these memos. The petitioner, engaged in jewelry manufacturing, underwent a search under section 67(2) of the CGST Act to verify GST payments. The officers seized excess finished goods during the search and later valued them at &8377; 4,10,68,644/-. The petitioner requested provisional release of goods, claiming GST payment and penalty under section 74(5) of the Act. Despite providing reasons for non-seizure necessity, the goods were not released, leading to hardship for the petitioner.

The petitioner relied on section 67 of the CGST Act, emphasizing sub-section (6) for provisional release of seized goods upon bond execution or payment of applicable tax, interest, and penalty. The petitioner had paid a substantial amount and reversed SGST credit but faced a proposed demand of around &8377; 13 crores. The petitioner proposed a bank guarantee of &8377; 50 lakhs for release, while the respondent suggested a guarantee of at least &8377; 1 crore.

The Court acknowledged the provisions of section 67(6) and rule 140 of the CGST Rules, empowering provisional release upon bond execution and security furnishing. Considering the total tax payable on seized goods and penalties, the Court found that a bank guarantee of &8377; 50 lakhs, along with a bond in FORM GST INS-04, would serve the interest of justice. Therefore, the Court directed the respondents to provisionally release the seized goods upon the petitioner fulfilling the specified conditions.

In conclusion, the petition was partly allowed, and the respondents were instructed to release the seized goods upon the petitioner executing a bond for the total value of goods and providing a bank guarantee of &8377; 50 lakhs.