2020 (5) TMI 92 - HC - GST

Release of confiscated goods alongwith vehicle - section 129 of CGST Act - HELD THAT - The writ applicant availed the benefit of the interm-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. The proceedings shall go ahead in accordance with law. It shall be open for the writ applicant to point out the recent pronouncement of this Court in the case of SYNERGY FERTICHEM PVT. LTD VERSUS STATE OF GUJARAT 2020 (2) TMI 1159 - 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.

Issues Involved:
1. Legality of the order of detention under Section 129(1) of the GST Act.
2. Validity of the notice for confiscation and levy of penalty under Section 130 of the GST Act.
3. Compliance with procedural requirements under Sections 129 and 130 of the GST Act.
4. Examination of the nature of contravention and intent to evade tax.

Detailed Analysis:

1. Legality of the Order of Detention under Section 129(1) of the GST Act:
The petitioner challenged the detention of goods and conveyance under Section 129(1) of the GST Act, arguing that the order was "absolutely illegal, unlawful, contrary to the facts and evidence on record, violative of principles of natural justice and against the provisions of the Act and Rules framed thereunder."

2. Validity of the Notice for Confiscation and Levy of Penalty under Section 130 of the GST Act:
The petitioner contended that the notice for confiscation and levy of penalty under Section 130 was issued without initiating proceedings under Section 129, which is "not permissible in law." The notice contained various blanks, indicating non-compliance with the procedural requirements.

3. Compliance with Procedural Requirements under Sections 129 and 130 of the GST Act:
The court noted that the authorities must follow a specific procedure under Section 129 before resorting to Section 130. The impugned notice failed to comply with these procedural requirements, as evidenced by the unfilled blanks in the notice.

4. Examination of the Nature of Contravention and Intent to Evade Tax:
The court referred to its earlier judgment in Synergy Fertichem Pvt. Ltd. v. State of Gujarat, emphasizing that "the contravention could be trivial or it may be quite serious sufficient enough to justify the detention and seizure." The authorities should closely examine the nature of the contravention and whether it was with an intent to evade tax. The court observed that "practically in all cases of detention and seizure of goods and conveyance, the authorities would straightway invoke Section 130 of the Act," rendering Section 129 "practically otiose."

The court clarified that for invoking Section 130 at the threshold, the authorities need to make out a "very strong case" and record their reasons for such belief in writing. The notice for confiscation must disclose the materials upon which the belief is formed. The formation of the opinion by the authority should reflect "intense application of mind" and not be based on mere suspicion.

Conclusion:
The court disposed of the writ application, making the rule absolute to the extent that the petitioner could now argue that the show cause notice issued in GSTMOV-10 deserved to be discharged. The proceedings under Section 130 of the GST Act were to continue in accordance with the law, allowing the petitioner to rely on the observations made in the Synergy Fertichem Pvt. Ltd. case.

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