2021 (1) TMI 99 - HC - GST

Principles of Natural Justice - Service of Demand Notice - Detention/Confiscation of goods - case of petitioner is to the effect that the petitioner M/s. Lakshay Logistics was never served with any notice before the order of confiscation was passed on 16.03.2020 in Form MOV-11 - whether the transporter or the owner of the conveyance has been served with the notice or not, if not, whether it was mandatory or not? - HELD THAT - Section 130 of the GST Act, provides for confiscation of goods or conveyance under given circumstances. Subsection (4) of Section 130 of the GST Act specifically provides that no order for confiscation of goods or conveyance or for imposition of penalty would be issued without giving the person an opportunity of being heard. The person in the said context would be the person interested in the goods as also the conveyance - Therefore, opportunity of being heard is to be given to both the owner of the goods as also the owner of the conveyance. In the present case, we do not find any notice affording opportunity of hearing to the owner of the conveyance. As such the impugned order of confiscation would be in violation of Section 130(4) of the GST Act. The order of confiscation would be without affording due opportunity of hearing. The impugned order as such cannot be sustained as the same has serious civil and financial consequences. The matter is remanded to the competent authority to pass a fresh order strictly in accordance with law after affording opportunity of hearing to the parties concerned - Petition allowed by way of remand.

Summary

Issues:
Challenge to detention order under GST Act - Correctness of detention order, confiscation notice, and order of confiscation - Failure to serve notice to the owner of the conveyance - Violation of Section 130(4) of the GST Act.

Analysis:
The petition challenged the detention order, confiscation notice, and order of confiscation under the GST Act. The petitioner, a logistics firm, had its vehicle detained due to discrepancies while transporting goods for another entity. One argument raised was the lack of notice to the petitioner before the confiscation order was issued. The court requested the Assistant Government Pleader to provide clarification on this matter.

The court examined the notice served, which was addressed to a different entity involved in the transportation, not the petitioner. It was noted that the order of confiscation affected not only the goods but also the conveyance. The crucial issue was whether the transporter or the owner of the conveyance had been served with the notice, as required by Section 130(4) of the GST Act. The court found that the owner of the conveyance had not been given an opportunity to be heard, rendering the confiscation order in violation of the Act.

Section 130 of the GST Act mandates giving an opportunity of being heard to both the owner of the goods and the owner of the conveyance before issuing an order of confiscation. Since the owner of the conveyance was not afforded this opportunity, the confiscation order was deemed invalid. The court held that the order of confiscation could not be sustained due to the lack of due process, leading to serious civil and financial consequences.

Consequently, the petition was allowed, and the order of confiscation was quashed. The matter was remanded to the competent authority to issue a fresh order following proper legal procedures and affording all concerned parties the opportunity to be heard. The court clarified that the decision did not address the validity of the notice or detention order, allowing the petitioner to raise objections in response to the show cause notice while emphasizing the need for cooperation in the proceedings.