2019 (12) TMI 95 - SC - GST

Release of seized goods - compliance with Section 67 (8) of the Central Goods and Services Act, 2017 and Rule 141 of the relevant Rules - HELD THAT - There are no hesitation in observing that the High Court in all such cases ought to have relegated the assessees before the appropriate Authority for complying with the procedure prescribed in Section 67 of the Act read with Rules as applicable for release (including provisional release) of seized goods. There is no reason why any other indulgence need be shown to the assessees, who happen to be the owners of the seized goods. They must take recourse to the mechanism already provided for in the Act and the Rules for release, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum (even upto the total value of goods involved), respectively, as may be prescribed or on payment of applicable taxes, interest and penalty payable, as the case may be, as predicated in Section 67 (6) of the Act. The orders passed by the High Court which are contrary to the stated provisions shall not be given effect to by the authorities. Instead, the authorities shall process the claims of the concerned assessee afresh as per the express stipulations in Section 67 of the Act read with the relevant rules in that regard. In terms of this order, the competent authority shall call upon every assessee to complete the formality strictly as per the requirements of the stated provisions disregarding the order passed by the High Court in his case, if the same deviates from the statutory compliances. That be done within four weeks without any exception. We reiterate that any order passed by the High Court which is contrary to the stated provisions need not be given effect to in respect of all the cases referred in the affidavit by the State Government before this Court and fresh cases which may have been filed or likely to be filed before the High Court in connection with the subject matter of these appeals, by all concerned and are deemed to have been set aside/modified in terms of this order - In view of this order, all the Writ Petitions pending before the High Court, list whereof has been furnished in the affidavit are deemed to have been disposed of accordingly. Appeal disposed off.

Issues Involved:
1. Legality of High Court's interim orders directing the release of seized goods.
2. Mechanism under the Central Goods and Services Tax Act, 2017 for the release and disposal of seized goods.
3. Compliance with Section 67 of the Act and relevant Rules for the provisional release of seized goods.
4. Validity of High Court's orders extricating assessees from paying applicable tax in cash.

Detailed Analysis:

1. Legality of High Court's Interim Orders Directing the Release of Seized Goods:
The State of U.P. challenged the High Court's interim orders directing the release of seized goods subject to the deposit of security other than cash or bank guarantee or an indemnity bond equal to the value of tax and penalty. The Supreme Court noted that similar orders were passed in several other writ petitions, which led to the disposal of the main writ petitions as infructuous. The Supreme Court emphasized that such orders cannot be countenanced as they make the State's claim a fait accompli. The Court directed that in future, if such situations arise, the petitioner (Department) should inform the High Court about the pending special leave petition before the Supreme Court.

2. Mechanism Under the Central Goods and Services Tax Act, 2017 for the Release and Disposal of Seized Goods:
The Supreme Court highlighted that the Central Goods and Services Tax Act, 2017, along with its Rules, provides a complete mechanism for the release and disposal of seized goods. Specifically, Section 67(8) and Rule 141 were referenced, which outline the procedure for the release of perishable or hazardous goods upon payment of an amount equivalent to the market price or the amount of tax, interest, and penalty, whichever is lower. The Court stressed that the High Court should not entertain writ petitions questioning the seizure of goods and issue directions for their release, as a complete mechanism is already provided under the Act and Rules.

3. Compliance with Section 67 of the Act and Relevant Rules for the Provisional Release of Seized Goods:
The Supreme Court reiterated that assessees must comply with the procedure prescribed in Section 67 of the Act and the relevant Rules for the provisional release of seized goods. This includes executing a bond and furnishing security or paying the applicable tax, interest, and penalty. The Court emphasized that the High Court should have relegated the assessees to the appropriate Authority for compliance with these procedures. The Court further detailed the provisions of Section 67, which include the power of inspection, search, and seizure, and the conditions under which seized goods can be released.

4. Validity of High Court's Orders Extricating Assessees from Paying Applicable Tax in Cash:
The Supreme Court found that the High Court's interim orders, which extricated assessees from paying the applicable tax amount in cash, were contrary to the provisions of the Act. The Court stated that such orders should not be given effect by the authorities. Instead, the authorities should process the claims of the concerned assessees afresh as per the express stipulations in Section 67 of the Act and the relevant Rules. The competent authority was directed to call upon every assessee to complete the formalities strictly as per the statutory requirements, disregarding any High Court order that deviates from these compliances.

Conclusion:
The Supreme Court disposed of the appeals by directing that any High Court order contrary to the stated provisions of the Act and Rules need not be given effect. The authorities were instructed to process the claims of the assessees afresh in compliance with the statutory provisions. The Court's order aimed to ensure consistency in the application of the law and to avoid multiple appeals by the State or assessees against unstatable orders passed by the High Court. All pending applications were also disposed of accordingly.

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