2022 (3) TMI 585 - HC - VAT and Sales Tax

Detention of goods alongwith penalty - Levy of tax and penalty - goods were attempted to be offloaded in the State of West Bengal, though the goods were consigned to the State of Assam - HELD THAT - As long as the respondent nos.1 and 2 do not admit any of the tax liability or interest or fine or penalty, the question of invoking Clause (a) of Section 112 (8) would not arise. If that is the fact situation, then it has to be seen as to whether Clause (b) of Section 112(8) has been complied with. In fact, the learned writ Court bearing the same in mind had directed payment of additional 20% of the disputed tax, which the first respondent has already deposited. The exercise of discretion is neither improper or irrational for us to interfere. The interest of revenue stands sufficiently safeguarded as 30% of the disputed tax has been collected by the department. This Court expressed a concern that the product being pan masala and vehicle along with the goods having been detained for almost a year, the same would be unfit for consumption. This factual position is admitted by the first respondent - Court also expressed a concern that the first respondent, the consignee / owner of the goods, if is allowed to take the goods to the State of Assam, there may be a likelihood that the goods may be sold in the open market, which would be harmful. The appeal is disposed of by directing the respondent nos.1 and 2 to execute a bond in the form as approved by the appellant authorities securing the interest of the revenue and also a letter of undertaking to produce the vehicle-in-question as and when required.

Summary

Issues:
Interim order challenged under CGST Act, 2017 | Detention of goods consigned to Assam in West Bengal | Lack of forum for appeal | Release of goods and vehicle | Disputed tax payment condition | Revenue's interest protection | Discretionary order challenged by revenue | Goods unfit for consumption | Goods to be sent back to consignor | Bond and undertaking for disputed tax | Vehicle production undertaking | Disposal of appeal and application

Analysis:
The judgment involves an intra Court appeal against an interim order challenging the confirmation of tax and penalty under the CGST Act, 2017. The goods, consigned to Assam, were detained in West Bengal, leading to the appellant's inability to avail an alternative remedy before the Appellate Tribunal due to the lack of a forum at the time of filing the writ petition. The respondent nos.1 and 2 sought the release of goods and the vehicle, claiming the goods were unsuitable for consumption and the vehicle had deteriorated due to prolonged detention.

The learned Single Bench entertained the writ petition, directing 20% of the disputed tax to be paid for the release of goods and the vehicle. The revenue objected to this order, citing concerns about revenue protection and the conditions specified in Section 112(8)(a) of the Act. However, the Court found the exercise of discretion reasonable, given the circumstances. The respondent denied tax liability, asserting the goods were mistakenly taken into West Bengal and were intended for Assam.

The Court acknowledged the goods' unsuitability for consumption and the deterioration of the vehicle, emphasizing the need for a balance between revenue protection and fairness to the respondents. It was agreed that the goods should be sent back to the consignor in Uttar Pradesh to prevent potential harm. The Court directed the execution of a bond and an undertaking for the disputed tax amount to secure revenue interests and ensure cooperation in the proceedings.

Ultimately, the Court upheld the Single Bench's order, emphasizing the unique circumstances of the case and the agreement to return the goods to the consignor. The respondents were instructed to comply with the specified conditions for the release of goods and the vehicle within three days. The judgment highlighted the non-precedential nature of the decision, considering the specific agreement regarding the goods' return to Uttar Pradesh.

In conclusion, the judgment addressed the complex issues of tax liability, goods detention, revenue protection, and the practical considerations of releasing unfit goods while ensuring compliance and cooperation from the parties involved.