2019 (12) TMI 778 - HC - GST

Pre-condition for maintainability of appeal - release of confiscated goods - HELD THAT - Mere pendency of an appeal cannot be the basis for a direction to release the goods without any security, since the non payment of the security in respect of the goods can independently lead to a confiscation of the goods under Section 130 of the CGST Act. The writ petition is disposed off by directing the 2nd respondent to consider and pass orders on Ext.P5 appeal within a period of three months from the date of receipt of a copy of this judgment, after hearing the petitioner.

Summary

Issues:
1. Appeal against penalty order and release of goods pending appeal.

Analysis:

The petitioner appealed against an order of penalty and sought the release of goods pending the appeal. The petitioner had paid 10% of the disputed tax as a condition for maintaining the appeal. The goods subject to the penalty order were still in the custody of the department, and the petitioner had not provided any security for their release. The court considered the arguments presented by both the petitioner's counsel and the Government Pleader.

The Government Pleader pointed out that the appeal before the 2nd respondent was against an order confirming the tax and penalty liability. The detention of the goods and the possibility of confiscation under Section 130 were still valid. The petitioner had not complied with the conditions under Section 129(6), which could lead to confiscation. It was suggested that the petitioner could seek release by providing a bank guarantee for the entire tax and penalty amount as per Section 129(5).

The court acknowledged the Government Pleader's submission that the mere pendency of an appeal did not warrant the release of goods without security. Non-payment of security could independently result in confiscation under Section 130 of the CGST Act. The court directed the 2nd respondent to consider and decide on the appeal within three months, after which the petitioner could seek the release of goods by furnishing a bank guarantee for the confirmed tax and penalty amounts. Alternatively, the petitioner could await the outcome of the confiscation proceedings.

In conclusion, the court emphasized the importance of complying with the statutory provisions regarding the release of goods pending appeal and highlighted the significance of providing necessary security to prevent confiscation under the law.