2020 (2) TMI 341 - HC - GST

Release of detained goods alongwith the vehicle - validity of order of confiscation u/s 130 - HELD THAT - The writ applicant availed the benefit of the interim-order passed by this Court and got the vehicle, along with the goods released on payment of the tax amount. The proceedings, as on date, are at the stage of show cause notice, under Section 130 of the Central Goods and Services Act, 2017. It is now for the applicant to make good his case that the show cause notice, issued in GST-MOV-10, deserves to be discharged. Application disposed off.

Summary

Issues involved:
Writ application under Article 226 of the Constitution of India seeking reliefs related to a notice passed under section 130 of the GST Act without following provisions of section 129.

Analysis:

1. The writ applicant sought various reliefs through the writ application, including admission and allowance of the petition, issuance of a writ of prohibition against further proceedings based on the order dated 09.10.2019 under section 130 of the GST Act without following section 129 provisions, and release of detained goods and vehicle. The applicant had availed the interim-order passed by the court, resulting in the release of the vehicle and goods upon payment of tax. The proceedings were at the show cause notice stage under Section 130 of the Central Goods and Services Act, 2017, to proceed in accordance with the law.

2. The court referred to a previous order by a Coordinate Bench directing the release of a conveyance and goods upon payment of tax as interim relief. The court emphasized the importance of examining the nature of contravention of provisions and the intent to evade tax before invoking Section 130 for confiscation. The judgment highlighted the need for authorities to have justifiable grounds to issue a notice of confiscation under Section 130 and not to presume intent to evade tax without proper examination.

3. The court discussed the significance of proper examination of contravention of provisions and intent to evade tax before invoking Section 130 at the detention and seizure stage. It emphasized that authorities need to establish a strong case for invoking Section 130 at the threshold and record reasons for such belief in writing. The judgment stressed the need for materials supporting the authority's belief for confiscation, reflecting an intense application of mind to avoid unnecessary detention of goods and conveyance.

4. The court clarified that while authorities can invoke Section 130 at the threshold, they must have a strong basis for doing so, ensuring the action is in good faith and not a mere pretense. The judgment highlighted the penal and deterrent nature of confiscation under Section 130, emphasizing the need for proper examination and justification before taking such drastic actions. The applicant was required to demonstrate why the show cause notice in GST-MOV-10 should be discharged.

5. Ultimately, the court disposed of the writ application, making the rule absolute to the extent mentioned in the judgment, indicating that the applicant needed to substantiate why the show cause notice should be discharged based on the principles discussed in the judgment and the recent pronouncement by the court in a related case.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the court's reasoning behind the decision, focusing on the proper application of legal provisions and the need for authorities to establish a strong basis before invoking confiscation under Section 130 of the GST Act.