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2021 (9) TMI 937 - HC - GSTDetention of goods - E-way bills expired - Constitutional validity of Section 129 of the Central Goods and Services Tax Act/State Goods and Services Tax Act, read with Rule 140 of the CGST/SGST Rules - Seeking declaration that Section 129 of the CGST Act does not mandate the deposit of tax again, once the tax is already paid - validity of SCN passed by the respondent-department under Section 129(3) of the CGST/SGST Act - legality of different orders, dated NIL, passed by the respondent no. 3 under Section 129(3) of the CGST/SGST Act - order passed by respondent no. 3, for detaining the trucks owned by the petitioner - validity of rectification/withdrawal orders dated, 23.04.2021, passed by the respondent no. 3 under Rule 142(7) of the CGST/SGST Rules - validity of order issued by the respondent No.3 under Section 130 of the CGST/SGST Act. Constitutional validity of the act - HELD THAT - The constitutional validity of an Act can be challenged only on two grounds viz. (i) lack of legislative competence; and (ii) violation of any of the fundamental rights, guaranteed in Part III of the Constitution or of any other constitutional provisions. In STATE OF AP. VERSUS MCDOWELL CO. 1996 (3) TMI 525 - SUPREME COURT , the Hon ble Supreme Court has held that except the above two grounds, there is no third ground on the basis of which the law made by the competent legislature can be invalidated and that the ground of invalidation must necessarily fall within the four corners of the aforementioned two grounds. Violation of of Article 14, 19 (1) (g) and Article 300 A of the Constitution of India or not - HELD THAT - Article 19 (1) (g) of the Constitution guarantees that all citizens shall have the right to practice any profession, or to carry on any occupation, trade or business. However, these rights are not unqualified. It can be restricted and regulated by authority of law. Article 300 A provides that no person shall be deprived of his property save by authority of law. By Authority of Law means by or under a law made by the competent Legislature - In the facts and circumstances of the instant matter, the learned counsel for the petitioner could not able to show that the provisions of the enactments-in-question are unreasonable or the object of these enactments are to destroy a fundamental right/ constitutional right. Confiscation - Imposition of penalty - opportunity of being heard not given - HELD THAT - Before invoking the provisions of Section 130 for confiscation, there should be a very strong base to proceed for confiscation. Mere suspicion is not sufficient to invoke the provision of the confiscation. Moreover, the petitioner should be given an opportunity of being heard according to the intent of the Legislature before passing the confiscation order as mentioned in sub-section (4) of Section 130 - However, the respondents have completely failed to show that the petitioner was indeed, given an opportunity of being heard before the passing the orders of the confiscation in Form GST MOV-11. The confiscation orders dated 23.04.2021, passed under Section 130 in Form GST MOV-11, are not found to be passed in accordance with law. Therefore, the said impugned orders dated 23.04.2021 are liable to be quashed and set aside. Maintainability of petition - availability of alternative remedy of appeal - Section 107 of the CGST Act/SGST Act - HELD THAT - In DEVENDRA DWIVEDI VERSUS UNION OF INDIA ORS. 2021 (1) TMI 302 - SUPREME COURT , the petitioner had challenged the constitutional validity of certain provisions of the CGST Act. The Hon ble Supreme Court dismissed the writ petition after holding, The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue . Both the writ petitions are allowed partly - the impugned orders dated 23.04.2021, passed by the respondent no.3 under Section 130 in Form GST MOV-11 are set aside - the respondents are directed to release the vehicles and goods in question, which have been detained since 31.03.2021, upon execution of a bond for the value of the goods in Form GST INS-04 and furnishing of a security in form of a bank guarantee equivalent to the amount of applicable tax, interest and penalty payable, by the petitioner. The release of the vehicles and goods are subject to the final outcome of the confiscation proceedings.
Issues Involved:
1. Constitutional validity of Section 129 of the CGST/SGST Act and Rule 140 of the CGST/SGST Rules. 2. Declaration regarding the non-mandatory nature of tax deposit under Section 129 of the CGST Act. 3. Challenge to the show-cause notice dated 01.04.2021 under Section 129(3) of the CGST/SGST Act. 4. Challenge to the legality of orders under Section 129(3) of the CGST/SGST Act. 5. Challenge to the detention order dated 01.04.2021 for detaining the petitioner’s trucks. 6. Challenge to the rectification/withdrawal orders dated 23.04.2021 under Rule 142(7) of the CGST/SGST Rules. 7. Challenge to the order dated 17.04.2021 and subsequent orders under Section 130 of the CGST/SGST Act. Detailed Analysis: 1. Constitutional Validity of Section 129 of the CGST/SGST Act and Rule 140 of the CGST/SGST Rules: The petitioner challenged the constitutional validity of Section 129 and Rule 140 on the grounds of being arbitrary, unreasonable, and violative of Articles 14, 19(1)(g), and 300A of the Constitution of India. The court examined the provisions and found that the classification under Article 14 must be founded on an intelligible differentia and must have a rational relation to the object sought to be achieved by the Act. The court held that the provisions were not arbitrary or unreasonable and did not violate the mentioned Articles. The court emphasized that the burden of proof lies on the challenger to show clear transgression of constitutional principles, which the petitioner failed to do. 2. Declaration Regarding Non-Mandatory Nature of Tax Deposit under Section 129 of the CGST Act: The petitioner sought a declaration that Section 129 does not mandate the deposit of tax again once it is already paid. The court did not specifically address this issue in detail but focused on the procedural aspects and the compliance requirements under the CGST/SGST Act. 3. Challenge to the Show-Cause Notice Dated 01.04.2021: The petitioner challenged the show-cause notice issued under Section 129(3) of the CGST/SGST Act. The court noted that the show-cause notice was issued due to the expiration of the e-Way bills. The petitioner’s representatives submitted a detailed reply, but the office refused to accept it, leading to further complications. 4. Challenge to the Legality of Orders under Section 129(3) of the CGST/SGST Act: The petitioner challenged the legality of the orders passed under Section 129(3) of the CGST/SGST Act. The court found that the orders were issued without giving the petitioner an opportunity of being heard, which is a requirement under Section 130(4) of the Act. The court held that the orders were not passed in accordance with law and were liable to be quashed. 5. Challenge to the Detention Order Dated 01.04.2021: The petitioner challenged the detention order for detaining the trucks. The court noted that the trucks were detained despite there being no discrepancy found during the physical verification of the goods. The court found the detention orders to be unjustified and ordered the release of the vehicles and goods upon execution of a bond and furnishing of a bank guarantee. 6. Challenge to the Rectification/Withdrawal Orders Dated 23.04.2021: The petitioner challenged the rectification/withdrawal orders issued under Rule 142(7) of the CGST/SGST Rules. The court did not specifically address this issue in detail but focused on the procedural irregularities and the lack of opportunity for the petitioner to be heard. 7. Challenge to the Order Dated 17.04.2021 and Subsequent Orders under Section 130 of the CGST/SGST Act: The petitioner challenged the order dated 17.04.2021 and subsequent orders issued under Section 130 of the CGST/SGST Act. The court found that the petitioner was not given an opportunity of being heard before passing the confiscation orders. The court quashed the orders dated 23.04.2021 and directed the release of the vehicles and goods upon execution of a bond and furnishing of a bank guarantee. Conclusion: The court allowed the writ petitions partly, quashing the impugned orders dated 23.04.2021, and directed the release of the vehicles and goods upon execution of a bond and furnishing of a bank guarantee. The court clarified that the respondents may proceed further in accordance with law after giving an opportunity of being heard to the petitioner.
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