2021 (1) TMI 256 - HC - GST

Detention of goods alongwith the vehicle - Roto Fabric Cloth Bag - allegation is that product is actually cotton bags and therefore, within the sweep of Section 31 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It is indubitable that, at this stage, it will not be proper or prudent for this Court to enter into the merits of the controversy, since it will involve assessment of factual aspects and issues which is possible only through a a proper enquiry, following due procedure as per law. The petitioner must be given the latitude of having his articles released on the strength of sufficient security, which the petitioner accedes by way of a bank guarantee - on the further condition that the respondent completes the statutory adjudication within a time frame, after obtaining a sample of the bag in the presence and acknowledgment of the petitioner - it is directed that the petitioner to furnish a bank guarantee, drawn on a Nationalized Bank, for the amount covered by Ext.P7; and if this is done within a period of one week from the date of receipt of a copy of this judgment, the respondent shall release the articles to the petitioner, after taking a sample of the bags in the presence and acknowledgment of the petitioner.

Summary

Issues:
Detention of goods under Section 31 of the Central Goods and Services Tax Act, 2017; Alleged misclassification of goods as cotton bags instead of "Roto Fabric Cloth Bags"; Detention of vehicle under Section 129(1) of the Act; Legal and lawful detention of goods; Compliance with demand made against the petitioner; Proper adjudication and resolution of the matter.

Analysis:
The petitioner, a manufacturer of "Roto Fabric Cloth Bags," faced detention of their goods by the respondent, who alleged that the product was actually cotton bags falling under Section 31 of the CGST Act, 2017. The petitioner contended that the detention was based on a misconception and sought release of the consignment after a sample examination. The respondent argued that the nature of the articles, as per Ext.P7, supported the detention based on the tax invoice and E-way bills provided by the petitioner.

The petitioner's counsel argued that the detention under Section 129(1) of the Act was illegal, as there was no contravention from their client's side. The Government Pleader, on the other hand, urged the court to dismiss the writ petition, emphasizing compliance with the demand made against the petitioner through impugned orders and notices. The court refrained from delving into the merits of the controversy at that stage, citing the need for a proper enquiry to assess factual aspects and issues following due procedure as per law.

The court, in its judgment, granted relief to the petitioner by directing the release of the goods upon furnishing a bank guarantee for the specified amount. The respondent was instructed to complete statutory adjudication within a defined timeframe after obtaining a sample of the bags in the presence and acknowledgment of the petitioner. Emphasizing the need for expeditious adjudication, the court mandated completion within three weeks from the date of the judgment. The petitioner was granted the opportunity to be heard physically or through video conferencing during the adjudication process.

In conclusion, the court ordered the writ petition in favor of the petitioner, outlining the conditions for release of goods, completion of adjudication, and the timeline for resolution, ensuring a fair and efficient legal process in the matter.