2022 (2) TMI 52 - HC - GST

Detention of goods alongwith vehicle - detention of goods for indefinite time - few defects in the documents - HELD THAT - The detention of the conveyance and the goods for an indefinite period of time is not going to serve any good purpose. As on date, there is no notice issued under Section 130 of the Act for the purpose of confiscation of the conveyance and the goods. It is, ultimately, for the Department to take the final call whether any case for confiscation has been made out or not. This Court should not come in the way of the Department in that regard. The writ applicant is directed to deposit the amount of ₹ 14,36,528/- with the respondent No.4, and upon deposit of such amount, the respondent No.4 shall, at the earliest, release the conveyance and the goods. We clarify that we have otherwise not expressed any opinion on the merits of the case - application disposed off.

Summary

Issues:
Detention of goods in transit without lawful reason, liability towards tax and penalty under Sections 129 and 130 of the Central Goods & Services Tax Act, 2017.

Detention of Goods in Transit:
The writ applicant, a private limited company engaged in the supply of goods falling under Chapter-74 of the Customs Tariff Act, filed a writ application seeking the release of goods-in-transit detained by respondent No.4 without a valid reason. Despite no discrepancies found during physical verification, the respondent issued a detention order. The applicant argued that no penalty notice had been issued under Section 129(3) of the Act. The Court noted the absence of a confiscation notice under Section 130 and directed the applicant to deposit the tax and penalty amount of ?14,36,528 with respondent No.4 for the release of goods, emphasizing that the final decision on confiscation lies with the Department.

Liability Towards Tax and Penalty:
During the proceedings, the learned counsel for the respondent highlighted potential tax evasion concerns regarding the transaction between the applicant and the supplier, M/s. Nexus Enterprises. The respondent contended that the transaction might involve cash dealings and the creation of bogus vouchers to wrongfully claim input tax credit. The Court acknowledged these concerns but emphasized that the liability of the applicant was limited to the tax and penalty under Section 129 of the Act. The respondent calculated the total liability at ?14,36,528, comprising tax and penalty at 18% each. The Court directed the applicant to pay this amount for the provisional release of goods and the vehicle.

Conclusion:
The Court disposed of the writ application, instructing the applicant to deposit the specified amount with respondent No.4 for the release of goods-in-transit. It clarified that the decision on confiscation under Section 130 rests with the Department, and the applicant may seek legal recourse if necessary. The judgment highlighted the importance of complying with tax and penalty obligations under the Act while allowing the Department to proceed with its inquiry into potential tax evasion without interference from the Court.