2021 (9) TMI 422 - HC - GST

Confiscation of goods - wet tamarind - it is pleaded that the alleged show cause notice filed by the 1st respondent was prepared later after obtaining the signature and stamp of the petitioner on blank paper. - tax and penalty collected under other head as a condition for release of the commodity without conducting any assessment or penalty proceedings and instead, issuing impugned summary of order by treating the detention notice as assessment order - without giving opportunity of hearing and without passing assessment order or penalty order or confiscation order under the relevant provisions, the detention notice was treated as assessment order - violation of principles of natural justice - HELD THAT - The show cause notice contains the stamp and signature of the petitioner. So also the confession letter dated 12.03.2018 is written in vernacular language i.e., Telugu and it also contains the signature of the petitioner. If issuance of the show cause notice and passing of the proceedings consequent upon the admission of the guilt of the petitioner are true, the respondents can be said to have followed the procedure contemplated under Section 130. The question is whether the show cause notice dated 11.03.2018 was issued to the petitioner and whether the petitioner executed the confession letter dated 12.03.2018. The petitioner s explanation in his reply is that he did not receive the show cause notice and did not execute the confession letter dated 12.03.2018. In the writ averments, the petitioner at the first instance did not take any plea that his signatures were obtained on blank papers. It is only after the respondents filed their counter and enclosed the show cause notice and other documents, then in the reply affidavit the petitioner for the first time took such plea. Hence, the contention of the petitioner does not merit consideration. So at the outset the confiscation proceedings and imposition of fine in lieu of confiscation etc., undertaken by the 1st respondent cannot be said to be in violation of law and rules. Petition dismissed.

Summary

Issues Involved:
1. Detention of goods and vehicle without proper assessment or penalty proceedings.
2. Legality of the notice of detention being treated as an assessment order.
3. Compliance with principles of natural justice.
4. Applicability of Sections 129 and 130 of the AP GST Act, 2017.
5. Entitlement to refund of the amount deposited by the petitioner.

Detailed Analysis:

1. Detention of Goods and Vehicle Without Proper Assessment or Penalty Proceedings:
The petitioner’s vehicle, carrying wet tamarind, was detained by the 1st respondent on 11.03.2018. The detention was based on the driver’s failure to produce relevant documents such as a tax invoice and delivery challan, which are mandatory under the AP GST Act, 2017. The petitioner argued that he had followed the instructions given in a meeting by GST authorities by obtaining Aadhaar cards of the farmers and mentioning necessary details. Despite this, the 1st respondent demanded a deposit of ?5,15,000/- for the release of the goods without conducting any formal assessment or penalty proceedings.

2. Legality of the Notice of Detention Being Treated as an Assessment Order:
The 1st respondent treated the notice of detention dated 11.03.2018 as an assessment order and issued a “summary of order” on 02.12.2019. The petitioner contended that this action was contrary to the principles of natural justice, as no proper assessment or penalty order was passed. The petitioner sought a refund of the amount deposited, minus the tax component.

3. Compliance with Principles of Natural Justice:
The petitioner argued that he was not given an opportunity to be heard, and no proper notice was issued for assessment or penalty proceedings. The 1st respondent, however, claimed that a show cause notice was issued, and the petitioner had admitted his guilt through a confession letter dated 12.03.2018. The court scrutinized the documents and found that the show cause notice and confession letter bore the petitioner’s signature, thus rejecting the petitioner’s claim of not receiving the notice or executing the confession letter.

4. Applicability of Sections 129 and 130 of the AP GST Act, 2017:
The court examined whether the proceedings under Sections 129 and 130 of the AP GST Act could be initiated simultaneously. It referred to the judgment in *Synergy Fertichem Pvt. Ltd.*, which clarified that Sections 129 and 130 are mutually exclusive. Section 129 deals with detention, seizure, and release of goods and conveyance in transit, while Section 130 deals with confiscation of goods or conveyance and levy of penalty. The court found that the 1st respondent had followed the procedure under Section 130 by issuing a show cause notice and collecting a fine in lieu of confiscation.

5. Entitlement to Refund of the Amount Deposited by the Petitioner:
The petitioner’s application for a refund was rejected by the 2nd respondent, stating that the amount collected was related to confiscation proceedings under Section 130. The court upheld this decision, finding that the 1st respondent had lawfully invoked Section 130 and collected the amount as a fine in lieu of confiscation.

Conclusion:
The court dismissed the writ petition, concluding that the 1st respondent had followed the proper legal procedures under Section 130 of the AP GST Act. The petitioner’s claims of not receiving the show cause notice and not executing the confession letter were found to be unsubstantiated. The court found no violation of principles of natural justice and upheld the rejection of the refund application.