2019 (6) TMI 716 - HC - GST

Seizure of the gold ornaments entrusted by the petitioners - evasion of tax - SGST Act - gold ornaments sent for hallmarking - HELD THAT - There being no possibility of an evasion of tax in respect of the goods, by the 6th respondent since the goods themselves belong to the petitioners, I am of the view that the goods entrusted by the petitioners, with the 6th respondent, and covered by the delivery chellan and issue vouchers aforementioned, cannot be the subject matter of a confiscation order under Section 130 passed in relation to the 6th respondent. The Department may be permitted to retain the seized goods for the purposes of completing the enquiry against the 6th respondent in terms of the provisions of the SGST Act, I dispose these writ petitions, by directing that the respondent authorities under the SGST Act shall complete the proceedings against the 6th respondent, within an outer time frame of one month from the date of receipt of a copy of this judgment. Petition disposed off.

Summary

Issues:
Seizure of gold jewellery by authorities under SGST Act, justification of continued seizure, confiscation orders, release of seized goods, completion of proceedings against the 6th respondent.

Seizure of Gold Jewellery:
The petitioners, engaged in the trade of gold jewellery, entrusted gold jewellery with the 6th respondent for hallmarking. Authorities under the SGST Act seized the jewellery during an inspection at the 6th respondent's premises. The respondents justified the seizure under Section 67 of the SGST Act, suspecting tax evasion by the 6th respondent due to lack of proper records. The petitioners sought to quash the seizure orders, arguing that the jewellery was entrusted for hallmarking purposes only.

Justification of Continued Seizure:
The authorities argued that the power to seize goods is under Section 67 of the SGST Act and justified the seizure of the jewellery. They mentioned that the 6th respondent was not maintaining valid documents, indicating possible tax evasion. They highlighted that the goods could be released on a provisional basis under Section 67(6) of the SGST Act.

Confiscation Orders:
The judgment noted that the seizure of jewellery belonging to the petitioners was due to suspicions of tax evasion by the 6th respondent. However, it emphasized that confiscation orders under Section 130 of the SGST Act against the 6th respondent could not apply to goods belonging to the petitioners. The court ruled that confiscation of petitioners' goods was unjustified.

Release of Seized Goods:
The court directed the authorities to complete proceedings against the 6th respondent within one month and ordered the release of the jewellery to the petitioners after this period. The seizure orders related to the petitioners' jewellery were quashed to facilitate the release.

Completion of Proceedings Against 6th Respondent:
The judgment concluded by directing the authorities to complete proceedings against the 6th respondent within one month. It clarified that the jewellery entrusted by the petitioners should be released after this period, regardless of the status of the proceedings against the 6th respondent. Seizure and prohibition orders related to the petitioners' jewellery were quashed.