2021 (10) TMI 188 - HC - GST

Seeking provisional release of confiscated goods alongwith the conveyance - provision of filing of an appeal against the order of confiscation - no opportunity was given for depositing the amount of demand of tax and penalty - Rule 140(1) of the CGST Rules - principles of natural justice - HELD THAT - While the petitioner assailed the initial action of the respondents before this Court and challenged the orders dated 22.01.2021 and 25.01.2021, it appears that during the pendency of the writ petition, the respondents proceeded and passed an order of demand of Tax and penalty on 08.02.2021. In the said order, 14 days time was given to deposit the amount from the date of detention and as 14 days had lapsed on the next date i.e. 09.02.2021, notice of confiscation of goods was initiated and final confiscation of order has been passed on 09.03.2021. Admittedly, the goods were seized on 22.01.2021. Thus, on the date when the order of demand of tax and penalty was issued on 08.02.2021, 14 days time had already been lapsed. Virtually, the petitioner has not been given any chance to deposit the tax and penalty. Since this Court has observed that no opportunity was given for depositing the amount of demand of tax and penalty while issuing the order dated 08.02.2021, it would be in the fitness of the things and in the interest of justice that the petitioner be given a chance to avail the provisional release of goods and vehicle in terms of Rule 140(1). It is directed that if the petitioner fulfills the conditions as laid down under Rule 140(1) of the CGST Rules of 2017, the respondents shall release the goods provisionally subject to the final outcome of the appeal for further proceedings which may be available to the petitioner under the Act - Petition disposed off.

Summary

Issues:
1. Opportunity for depositing tax and penalty before initiation of confiscation proceedings.
2. Provisional release of seized goods under Rule 140(1) of the CGST Rules.
3. Challenge against the order of confiscation and appeal process.

Analysis:
1. The petitioner argued that the respondents proceeded to confiscate goods without providing an opportunity to deposit tax and penalty, citing a previous judgment emphasizing the need for a fair chance to pay assessed amounts. The Court noted that the initial seizure date was 22.01.2021, and the order demanding tax and penalty was issued on 08.02.2021, allowing only 14 days for payment. As this period lapsed before the confiscation notice on 09.02.2021, the petitioner was effectively denied the opportunity to comply.

2. The respondents contended that the petitioner could appeal the orders of demand and confiscation, urging them to approach the Appellate Forum for redressal. However, the Court highlighted the independence of Sections 129 and 130, emphasizing that provisional release under Rule 140(1) could have been considered before final confiscation under Section 130. Acknowledging the lack of opportunity for deposit, the Court directed the provisional release of goods if the petitioner fulfilled Rule 140(1) conditions.

3. In its decision, the Court directed the petitioner to challenge the confiscation order and other decisions before the Appellate Authority. It stressed the importance of a timely appeal resolution, ideally within two months, and specified that any Bank Guarantee submitted should not be encashed until the appeal's final disposal. The writ petition and stay application were consequently disposed of, with the petitioner granted the chance to avail provisional release pending appeal proceedings.