2020 (2) TMI 275 - HC - GST

Release of confiscated goods alongwith the truck - legality and validity of the order passed by the authority in the Form GST MOV-11. - interpretation of Sections 129 and 130 of the GST Act - HELD THAT - As regards the legality and validity of the impugned order of confiscation in the Form GST MOV-11, the submissions of petitioner can be agreed upon. The impugned order of confiscation in Form GST MOV-11 is hereby quashed and set aside. The matter is remitted to the respondent No.2 for fresh consideration so far as the issue of confiscation is concerned - the writ application is allowed in part.

Issues Involved:
1. Legality of the detention and confiscation orders under Sections 129 and 130 of the GST Act.
2. Validity of the confiscation order issued on the same day as the notice.
3. Interpretation and application of Sections 129 and 130 of the GST Act.
4. Consideration of the principles laid down in the case of Synergy Fertichem Pvt. Ltd. vs. State of Gujarat.

Issue-wise Detailed Analysis:

1. Legality of the detention and confiscation orders under Sections 129 and 130 of the GST Act:
The writ-applicant, a proprietary concern, challenged the detention order dated 22.4.2019 and the confiscation order dated 11.4.2019, seeking quashing and setting aside of these orders. The goods were detained because the E-Way Bill was not produced during transit. The petitioner argued that the detention and confiscation were not justified as the requisite amount was deposited and the goods should have been released. The court noted that there were larger issues regarding the interpretation of Sections 129 and 130 of the GST Act, which were pending in other petitions.

2. Validity of the confiscation order issued on the same day as the notice:
The learned advocate for the petitioner highlighted that the notice for confiscation was issued on 22nd April 2019, and the final order of confiscation was passed on the same day. This simultaneous issuance and order raised questions about the application of mind and procedural fairness. The court found this unusual and indicative of a lack of proper consideration.

3. Interpretation and application of Sections 129 and 130 of the GST Act:
The court examined the procedural requirements under Sections 129 and 130 of the GST Act. Section 129 deals with the detention, seizure, and release of goods and conveyances in transit, while Section 130 pertains to the confiscation of goods or conveyances. The court emphasized that the authorities must first issue a notice under Section 129 and provide an opportunity for hearing before proceeding with confiscation under Section 130. The court referred to the principles laid down in the case of Synergy Fertichem Pvt. Ltd. vs. State of Gujarat, which clarified that not every contravention warrants confiscation and that the intent to evade tax must be evident.

4. Consideration of the principles laid down in the case of Synergy Fertichem Pvt. Ltd. vs. State of Gujarat:
The court reiterated the principles from the Synergy Fertichem case, emphasizing that the authorities must closely examine the nature of the contravention and whether it was with an intent to evade tax. The court noted that in many cases, authorities directly issue confiscation notices without proper application of mind, rendering Section 129 ineffective. The court stressed that the authorities must record their reasons for invoking Section 130 and that such reasons should be scrutinized by a superior authority to ensure fairness and reasonableness.

Conclusion:
The court allowed the writ application in part, quashing and setting aside the impugned order of confiscation in Form GST MOV-11. The matter was remitted to the respondent No.2 for fresh consideration of the confiscation issue, directing them to bear in mind the principles laid down in the Synergy Fertichem case. The court disposed of the writ application to the extent indicated and permitted direct service.

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