2020 (2) TMI 522 - HC - GST

Levy of penalty and confiscation of goods - section 129(1) of the GST Act - 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 - HELD THAT - It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SSYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT 2019 (12) TMI 1213 - GUJARAT HIGH COURT . It is now for the applicant to make good his case that the show cause notice, issued in Form GST-MOV-10, deserves to be discharged - Application disposed off.

Summary

Issues:
1. Detention and seizure of goods and conveyance under sections 129 and 130 of the GST Act.
2. Validity of the order of detention dated 12.7.2019.
3. Confiscation of goods or conveyances and levy of penalty under Section 130 of the GST Act.
4. Compliance with principles of natural justice.
5. Interpretation of Sections 129 and 130 of the GST Act.
6. Application of law in detaining goods and conveyance.

Analysis:
The High Court addressed a writ application challenging the detention and seizure of goods and conveyance under sections 129 and 130 of the GST Act. The petitioner sought the quashing of the detention order dated 12.7.2019 and the notice for confiscation of goods and levy of penalty. A Co-ordinate Bench had earlier ordered the release of goods upon depositing a penalty and tax amount. The Court noted that the petitioner, a registered dealer, had purchased scrap in transit, which was seized for alleged GST Act violations. Emphasizing the need for authorities to closely examine contraventions and intent to evade tax, the Court highlighted the importance of proper procedures and application of mind before invoking Section 130 for confiscation.

The Court referenced a recent judgment to stress that authorities should not issue confiscation notices without sufficient grounds or reasons, as it renders Section 129 ineffective. It was clarified that confiscation should be based on a strong case of intent to evade tax, not mere suspicion. The Court outlined the necessity for authorities to record reasons in writing and ensure a justifiable basis for invoking Section 130 at the initial stage of detention. Notably, the Court highlighted that confiscation is a penal action and should be based on solid evidence of tax evasion.

The judgment underscored the significance of disclosing materials and forming opinions in good faith to justify confiscation. It highlighted that every contravention may not warrant confiscation and stressed the need for intense application of mind by authorities. The Court emphasized that actions must be taken in good faith and not as a mere pretense. Ultimately, the Court disposed of the writ application, making the rule absolute to the extent mentioned, leaving the petitioner to contest the show cause notice issued for further proceedings under the GST Act.