2019 (9) TMI 1185 - HC - GST

Detention of goods alongwith the truck - E-way bills of three parties not generated - petitioner agreed to pay tax and penalty as stipulated under section 129 of the GST Act - Confiscation of goods - HELD THAT - mainly due to the fact that 14 invoices are not properly signed, the authorities have exercised powers under section 130 of the CGST Act and calculated tax, penalty and fine thereunder. If that be so, since none of the 14 invoices relate to the parties whose goods are confiscated, under the circumstances, the goods belonging to them could not have been confiscated by the respondent authorities. It is an admitted position that in this case no detention order under section 129 of the CGST Act/GGST Act has been made in this case and the respondents have directly resorted to the provisions of confiscation under section 130 of the said Acts. On reading the impugned order of confiscation in its entirety, it is manifest that the third respondent has not assigned any reason whatsoever as to why the goods and conveyance were required to be confiscated. Despite the fact that the petitioner and Anjani Synthetics Limited had submitted explanations in respect of the discrepancies noticed by the third respondent, there is no reference to the same in the impugned order. Thus, the third respondent without applying his mind to the facts of the case appears to have mechanically passed the impugned order without assigning any reasons worth the name for confiscating the goods and conveyance. The impugned order has been passed without any application of mind and without considering the explanation submitted by the petitioner and Anjani Synthetics Limited and in undue haste. Moreover, despite the fact that out of 61 consignments, the third respondent has noticed deficiencies only in respect of three consignments, the conveyance of the petitioner is also sought to be confiscated, that too without assigning any reasons as to how the petitioner has sought to evade payment of tax - it was incumbent upon the third respondent to give reasons in support of his conclusion that the goods in question and the conveyance are required to be confiscated. However, the impugned order is totally bereft of any reasons, in the absence of which the order stands vitiated due to non-application of mind on the part of the maker of the order. The impugned order dated 28.5.2019, therefore, cannot be sustained. Petition allowed.

Summary

Issues Involved:
1. Legality of the detention/confiscation order under section 130 of the GST Acts.
2. Whether the petitioner’s willingness to pay tax and penalty under section 129 of the GST Acts was ignored.
3. Validity of the confiscation notice and order without application of mind and reasons.
4. The impact of unsigned invoices on the confiscation decision.

Detailed Analysis:

1. Legality of the Detention/Confiscation Order under Section 130 of the GST Acts:
The petitioner challenged the notice and detention/confiscation order issued by the third respondent under section 130 of the GST Acts. The vehicle was intercepted, and it was found that the e-way bills for three consignments were not generated. The goods for these three consignments were detained and subsequently confiscated. The petitioner argued that this action was without jurisdiction, arbitrary, and illegal, especially since they had agreed to pay the tax and penalty as per section 129 of the GST Acts.

2. Whether the Petitioner’s Willingness to Pay Tax and Penalty under Section 129 of the GST Acts was Ignored:
The petitioner contended that despite agreeing to pay the tax and penalty as stipulated under section 129 of the GST Acts, the respondents proceeded directly to confiscate the goods under section 130 without completing the procedure under section 129. The court noted that no detention order under section 129 was made, and the respondents directly resorted to section 130, which was not justified.

3. Validity of the Confiscation Notice and Order Without Application of Mind and Reasons:
The court observed that the impugned order was passed without assigning any reasons for the confiscation of goods and conveyance. Despite the explanations provided by the petitioner and one of the parties, Anjani Synthetics Limited, the third respondent did not consider these explanations. The court emphasized that orders of confiscation under section 130 have serious civil consequences and must be passed with proper application of mind and reasons. The order was found to be mechanical and without any application of mind, thus vitiating it.

4. The Impact of Unsigned Invoices on the Confiscation Decision:
The respondents argued that 14 invoices were doubtful as they did not bear the signatures of authorized persons, suggesting an intention to evade tax. However, the court noted that none of these 14 invoices related to the three parties whose goods were confiscated. The affidavit-in-reply filed by the third respondent was also found to be without proper application of mind, as it did not correlate with the actual confiscated goods. The court concluded that the goods relating to the three parties could not have been confiscated based on the unsigned invoices.

Conclusion:
The court quashed and set aside the impugned order dated 28.5.2019, directing the respondents to release the conveyance and the goods contained therein. The court highlighted the necessity of providing reasons for such orders, referencing the Supreme Court’s decision in Kranti Associates (P) Ltd. v. Masood Ahmed Khan, which mandates that quasi-judicial authorities must record reasons in support of their conclusions to ensure fairness and transparency in decision-making.