9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 726 - HC - GSTSeeking directions from the Court that the petitioner shall not be insisted for submitting the Bank guarantee - search warrant and search proceedings carried out without jurisdiction - bogus firm and supply of fake invoices without supplying the raw material physically - release of goods on provisional basis, upon execution of a bond and furnishing of a security - Section 67(6) of the Central Goods Services Tax Act, 2017 read with Rule 140 of the Central Goods Services Tax Rules, 2017 - HELD THAT - Qua the nature of interim order passed by the High Court therein, the Court required that the assessee must take recourse to the mechanism provided under the Act and the Rules for release on provisional basis upon execution of bond and furnishing of a security in such manner and of such quantum as has been prescribed and it was ordered that the orders passed by the High Court which are contrary to the statutory provisions shall not be given effect to by the authorities. Admittedly, the petitioner himself applied under Section 67(6) of the Act seeking release of the seized goods vide Annex.10, based on which the order dated 11/5/2021 (Annex.15) was issued and as such passing of the order 11/5/2021 by the respondents also cannot be faulted. The order dated 21/5/2021 is modified to the extent that besides the surety bond of the equivalent amount of value of goods by the petitioner, it would be required of the petitioner to furnish security in the form of bank guarantee in terms of Section 67 (6) of the Act and Rule 140 of the Rules for release of the seized goods - the application filed by the respondents under Article 226(3) of the Constitution is allowed.
Issues Involved:
1. Legality of the seizure of goods without issuing a show cause notice. 2. Applicability of Section 67(6) of the CGST Act, 2017 and Rule 140 of the CGST Rules, 2017. 3. Jurisdictional authority for the seizure and search operations. 4. Validity of the interim order dated 21/5/2021. 5. Relevance and applicability of cited judgments. Detailed Analysis: 1. Legality of the Seizure of Goods Without Issuing a Show Cause Notice: The petitioner argued that ?50 lakh was recovered under duress without issuing a show cause notice under Section 74 of the CGST Act, 2017, and that the seizure of goods was illegal as the goods were duly accounted for. The respondents contended that the seizure was valid under Section 67(2) of the Act due to discrepancies found during inspection, and the petitioner’s goods were not secreted. 2. Applicability of Section 67(6) of the CGST Act, 2017 and Rule 140 of the CGST Rules, 2017: The respondents argued that the interim order allowing the release of goods without a bank guarantee was contrary to Section 67(6) and Rule 140, which require a bond and a bank guarantee for provisional release. The petitioner contended that as a registered person, actions should be under Section 35(6) read with Sections 73 or 74, not Section 67(6). The court noted that Section 67 could be invoked if circumstances indicated concealment, making the seizure prima facie legal. 3. Jurisdictional Authority for the Seizure and Search Operations: The petitioner claimed that only the Directorate General of GST Intelligence (DGGI) had jurisdiction, and the respondents’ actions were without jurisdiction. The respondents maintained that their actions were in line with statutory provisions and that CGST authorities had jurisdiction under Section 6(2)(b) of the Act. The court found the jurisdictional plea premature for vacating/modifying the interim order. 4. Validity of the Interim Order Dated 21/5/2021: The interim order allowed the release of goods based on a surety bond without insisting on a bank guarantee. The respondents sought vacation of this order, arguing it was against statutory provisions. The court, referencing the Supreme Court’s observations in Kay Pan Fragrance, held that statutory mechanisms for provisional release must be followed, thus modifying the interim order to require a bank guarantee. 5. Relevance and Applicability of Cited Judgments: The respondents cited Kay Pan Fragrance, Maa Karni Traders, and JVG Super Cargo Service to support their position. The petitioner argued these cases were not relevant as they pertained to transporters, not registered persons. The court dismissed this distinction, emphasizing that Section 67 applies equally to transporters and registered persons. The court followed the Supreme Court’s directive in Kay Pan Fragrance, mandating adherence to statutory provisions for provisional release. Conclusion: The court allowed the respondents’ application under Article 226(3) of the Constitution, modifying the interim order to require the petitioner to furnish a bank guarantee as per Section 67(6) of the Act and Rule 140 of the Rules for the release of seized goods. The observations were confined to the application’s disposal and would not affect the final writ petition outcome. The stay application was disposed of accordingly.
|
