2020 (2) TMI 337 - HC - GST

Release of detained goods alongwith vehicle - section 129 and 130 of CGST Act - validity of confiscation order dated 11.4.2019 in Form GST MOV-11 - the final order of confiscation came to be passed on the very same date on which the notice was issued. - HELD THAT - We are convinced with the submissions of petitioner, as regards the legality and validity of the impugned order of confiscation in Form GST MOV-11. This Writ Application is allowed, in part. 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.

Summary

Issues Involved:
1. Legality of the detention and confiscation orders.
2. Compliance with procedural requirements under Sections 129 and 130 of the GST Act.
3. Validity of the confiscation order issued before the notice.
4. Interpretation of Sections 129 and 130 of the GST Act.

Detailed Analysis:

1. Legality of the Detention and Confiscation Orders:
The writ applicant, a proprietorship, challenged the detention order dated 22.4.2019 in Form GST MOV-6 and the confiscation order dated 11.4.2019 in Form GST MOV-11. The primary contention was the improper issuance of these orders, particularly without following due process and the lack of an e-way bill during transit. The court noted that the goods were seized while being transported from Tamil Nadu to Delhi through Gujarat due to the absence of an e-way bill.

2. Compliance with Procedural Requirements under Sections 129 and 130 of the GST Act:
The court emphasized the necessity of adhering to Sections 129 and 130 of the GST Act. Section 129 mandates issuing a notice specifying the tax and penalty payable and providing an opportunity for a hearing before passing an order. The court observed that the authorities often bypass Section 129 and directly invoke Section 130, which deals with confiscation. This practice renders Section 129 ineffective, as highlighted in the previous judgment of Synergy Fertichem Pvt. Ltd. v. State of Gujarat.

3. Validity of the Confiscation Order Issued Before the Notice:
The court found a significant procedural flaw in the case: the confiscation order was issued on 11th April 2019, before the notice for confiscation dated 22nd April 2019. This anomaly indicated a lack of due process and application of mind by the authorities. The court underscored that issuing a confiscation order before the notice is legally untenable.

4. Interpretation of Sections 129 and 130 of the GST Act:
The court delved into the interpretation of Sections 129 and 130, emphasizing that not every contravention of the Act or Rules warrants invoking Section 130. The authorities must first assess the nature of the contravention and determine if there was an intent to evade tax. The court reiterated the principles from the Synergy Fertichem case, stating that confiscation should not be based on mere suspicion and must involve a detailed examination of the circumstances.

Conclusion:
The court allowed the writ application in part, quashing the confiscation order in Form GST MOV-11 and remitting the matter to the respondent for fresh consideration. The respondent was directed to adhere to the principles outlined in the Synergy Fertichem judgment, particularly the observations in paragraphs 99 to 104. The court's decision underscores the importance of following due process and ensuring that confiscation orders are not issued arbitrarily.